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Monopoly Pricing When Customers Queue

Listed author(s):
  • Hong Chen

    (University of British Columbia)

  • Murray Frank

    (University of British Columbia and Hong Kong University of Science and Technology)

It takes time to process purchases and as a result a queue of customers may form. The pricing and service rate decissions of a monopolist who must take this into account are characterized. We find that an increase in the average number of customers arriving in the market either has no effect on the monopoly price, or else causes the monopolist to reduce the price in the short run. In the long run the monopolist will increase the service rate and raise the price. When customer preferences are linear the equilibrium is socially efficient. When preferences are not linear equilibrium will not normally be socially efficient.

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Paper provided by EconWPA in its series Industrial Organization with number 9504001.

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Date of creation: 29 Apr 1995
Handle: RePEc:wpa:wuwpio:9504001
Note: 298333 bytes postscript file created with Latex. 34 page including the titlepage. Keywords: Queue, Monopoly, Customer Information, Service Rate, Social Welfare
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