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Equilibrium in Servicing Industries: An Economic Application of Queuing Theory

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  • Davidson, Carl

Abstract

The purpose of this article is to investigate the nature of equilibrium in markets in which service an d waiting time play an important role. The author shows that if consu mers do not know which firms are charging which prices, all firms cha rge the same price. If firms reveal their prices by advertising, the market separates with consumers with a high (low) cost of time buying from firms with high (low) prices and short (long) queues. If firms are allowed to advertise, they will, but they benefit from a collusiv e agreement restricting advertisement, provided the agreement is enfo rceable. Copyright 1988 by the University of Chicago.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Business.

Volume (Year): 61 (1988)
Issue (Month): 3 (July)
Pages: 347-67

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Handle: RePEc:ucp:jnlbus:v:61:y:1988:i:3:p:347-67

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Web page: http://www.journals.uchicago.edu/JB/

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Cited by:
  1. James T. Moser, 2002. "The immediacy implications of exchange organization," Working Paper Series WP-02-09, Federal Reserve Bank of Chicago.
  2. James G. Mulligan, 2006. "Endogenously determined Quality and Price In a Two-Sector Competitive Service Market With an Application to Down-Hill Skiing," Working Papers 06-01, University of Delaware, Department of Economics.
  3. James G. Mulligan & Nilotpal Das, 2005. "Persistent Adoption of Time-Saving Process Innovations," Working Papers 05-03, University of Delaware, Department of Economics.
  4. Michael Sattinger, 2002. "A Queuing Model of the Market for Access to Trading Partners," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 533-548, May.
  5. Pekka Ilmakunnas, 2002. "Strategic behavior in a service industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(2), pages 69-82.
  6. James G. Mulligan & Nilotpal Das, 2004. "Vintage Effects and the Diffusion of Time-Saving Technological Innovations: The Adoption of Optical Scanners by U.S. Supermarkets."," Working Papers 04-06, University of Delaware, Department of Economics.

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