On the uniqueness and stability of equilibrium in quality-speed competition with boundedly-rational customers : The case with general reward function and multiple servers

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)726-736
Journal / PublicationInternational Journal of Production Economics
Volume193
Online published6 Sep 2017
Publication statusPublished - Nov 2017
Externally publishedYes

Abstract

In this paper, we extend the service-speed competition game with boundedly rational customers considered in Li et al. (2016) to the case with general reward function and multiple servers. The N servers make strategic decisions on their service rates sequentially and repeatedly. Since the competing servers' payoff functions can only be expressed by an implicit-function set, we propose a matrix method to derive the uniqueness of the equilibrium service rates, and we establish the stability of the equilibrium through a tatônnement scheme. By conducting a sensitivity analysis regarding the number of competing servers and the demand density, we find that the server competition benefits the customers by improving their utilities as well as getting more customers to be served. Furthermore, for a fixed demand density, the equilibrium service rate increases in the market size and converges to a certain level when the market size is large enough. © 2017

Research Area(s)

  • Bounded rationality, Customer-sensitive service, Matrix, Strategic queueing

Citation Format(s)

On the uniqueness and stability of equilibrium in quality-speed competition with boundedly-rational customers : The case with general reward function and multiple servers. / Li, Xin; Li, Qingying; Guo, Pengfei; Lian, Zhaotong.

In: International Journal of Production Economics, Vol. 193, 11.2017, p. 726-736.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review