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Pricing and capacity allocation under asymmetric information using Paris Metro Pricing

Author

Listed:
  • Antonios Printezis
  • Apostolos Burnetas
  • Gopalakrishnan Mohan

Abstract

We consider a Paris Metro Pricing (PMP) approach for providing service to two classes of customers differentiated by their delay sensitivity. We develop a leader-follower game, where the leader is the service provider who sets the price and the customers respond by deciding whether to join or balk. We derive the customer behaviour as the Nash equilibrium of a multi-person game and obtain the revenue maximising price pairs for all combinations of arrival rates from each class to each server. We finally derive the capacity threshold in such domain and its impact on customer accessibility to the product or service.

Suggested Citation

  • Antonios Printezis & Apostolos Burnetas & Gopalakrishnan Mohan, 2009. "Pricing and capacity allocation under asymmetric information using Paris Metro Pricing," International Journal of Operational Research, Inderscience Enterprises Ltd, vol. 5(3), pages 265-279.
    • Handle: RePEc:ids:ijores:v:5:y:2009:i:3:p:265-279
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    Cited by:

    1. Pengfei Guo & Robin Lindsey & Zhe George Zhang, 2014. "On the Downs–Thomson Paradox in a Self-Financing Two-Tier Queuing System," Manufacturing & Service Operations Management, INFORMS, vol. 16(2), pages 315-322, May.

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