Service Competition with General Queueing Facilities

13 years 4 months ago

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In many service industries, companies compete with each other on the basis of the waiting time their customers experience, along with the price they charge for their service. A firm's waiting time standard may either be defined in terms of the expected value or a given, for instance 95%, percentile of the steady state waiting time distribution. We investigate how a service industry's competitive behavior depends on the characteristics of the service providers' queueing systems. We provide a unifying approach to investigate various standard single stage systems covering the spectrum from M/M/1 to general G/GI/s systems, along with open Jackson networks to represent multi-stage service systems. Assuming that the capacity cost is proportional with the service rates we refer to its dependence on (i)the firm's demand rate and (ii) the waiting time standard as the capacity cost function. We show that across the above broad spectrum of queueing models, the capacity cost f...

Gad Allon, Awi Federgruen

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