Quality-Speed Competition in Customer-Intensive Services with Boundedly Rational Customers
Li,Xin1; Guo,Pengfei2; Lian,Zhaotong3
Source PublicationProduction and Operations Management
ISSN19375956 10591478
AbstractWe consider a system in which two competing servers provide customer-intensive services and the service reward is affected by the length of service time. The customers are boundedly rational and choose their service providers according to a logit model. We demonstrate that the service provider revenue function is unimodal in the service rate, its decision variable, and show that the service rate competition has a unique and stable equilibrium. We then study the price decision under three scenarios with the price determined by a revenue-maximizing firm, a welfare-maximizing social planner, or two servers in competition. We find that the socially optimal price, subject to the requirement that the customer actual utility must be non-negative, is always lower than the competition equilibrium price which, in turn, is lower than the revenue-maximizing monopoly price. However, if the customer actual utility is allowed to be negative in social optimization, the socially optimal price can be higher than the other two prices in a large market.
Keywordbounded rationality customer-intensive service queueing strategy speed-quality competition
URLView the original
Fulltext Access
Citation statistics
Cited Times [WOS]:16   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionUniversity of Macau
Affiliation1.Department of Decision Sciences,School of Business,Macau University of Science and Technology,,Taipa,Macao
2.Department of Logistics and Maritime Studies,The Hong Kong Polytechnic University,,Hong Kong,Hong Kong
3.Faculty of Business Administration,E22,University of Macau,,Taipa,Macao
Recommended Citation
GB/T 7714
Li,Xin,Guo,Pengfei,Lian,Zhaotong. Quality-Speed Competition in Customer-Intensive Services with Boundedly Rational Customers[J]. Production and Operations Management,2016,25(11):1885-1901.
APA Li,Xin,Guo,Pengfei,&Lian,Zhaotong.(2016).Quality-Speed Competition in Customer-Intensive Services with Boundedly Rational Customers.Production and Operations Management,25(11),1885-1901.
MLA Li,Xin,et al."Quality-Speed Competition in Customer-Intensive Services with Boundedly Rational Customers".Production and Operations Management 25.11(2016):1885-1901.
Related Services
Recommend this item
Usage statistics
Export to Endnote
Google Scholar
Similar articles in Google Scholar
[Li,Xin]'s Articles
[Guo,Pengfei]'s Articles
[Lian,Zhaotong]'s Articles
Baidu academic
Similar articles in Baidu academic
[Li,Xin]'s Articles
[Guo,Pengfei]'s Articles
[Lian,Zhaotong]'s Articles
Bing Scholar
Similar articles in Bing Scholar
[Li,Xin]'s Articles
[Guo,Pengfei]'s Articles
[Lian,Zhaotong]'s Articles
Terms of Use
No data!
Social Bookmark/Share
All comments (0)
No comment.

Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.