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| The Duopoly Pricing Competition Considering Service Waiting Cost |
| KONG Ruixiao，LUO Li， ZHANG Yumeng ，YANG Jianchao |
| Sichuan University, Chengdu, China |
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Abstract This studyconsiders there are two service firms who provide the same type of service in the market, and each is modeled as an M/M/1 queuing system. In order to alleviate the negative impact caused by consumer waiting in the queue, a service firm will take some measures and bear the incurred cost, that is, the service waiting cost. However, the cost will have an impact on the competitive behavior of the service firms. In this regard, we analyze the duopoly competition pricing decisions and benefits with the consideration of the service waiting cost. The results show that the firm’s price and profit both have positive relationship with its own customer loyalty degree. The prices and profits of the firms both decrease as the own-price elasticity coefficients increase, and increase as the cross-price elasticity coefficients increase. In addition, the prices of the firms increase as the service waiting costs increase. However, the service waiting cost of a firm has negative effect on its own profit, but has positive effect on the profit of the other firm.
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Received: 11 September 2019
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