IDEAS home Printed from https://ideas.repec.org/a/eee/transb/v166y2022icp128-142.html
   My bibliography  Save this article

Shall firms withhold exact waiting time information from their customers? A transport example

Author

Listed:
  • Czerny, Achim I.
  • Guo, Pengfei
  • Hassin, Refael

Abstract

Apps which allow customers to check waiting times in real time on their smartphones become increasingly popular across many industries. Waiting time information is ambiguous in the sense that it is good news for some customers and bad news for other customers depending on whether they get to know that they have to wait short or long times, respectively. This paper studies the strategic choice of information strategies by considering a transport company that charges a uniform price to passengers. Waiting times are determined by headways which are given by the time difference between vehicle departures. The sum of the price and waiting time costs (determined by the waiting times and time valuations) represent the full price of traveling which vary among passengers depending on arrival times at the station. Passengers respond to variations in the full price by adjusting their demand rates in the sense that passengers may use an alternative mode of transport or refuse to travel if they have to wait or expect to wait for too long for the next departure. Two types of information strategies are considered. The company can advertise the exact schedule or advertise only the average lengths of interdeparture times (headways). The analysis shows that the curvature of the demand-rate function in the waiting time is crucial for the choice of information strategies in both the case of profit-maximizing companies and the case of welfare-maximizing companies where welfare is calculated by the sum of profit and consumer surplus. Numerical examples further indicate the crucial role of demand rate curvatures for headway and price choices.

Suggested Citation

  • Czerny, Achim I. & Guo, Pengfei & Hassin, Refael, 2022. "Shall firms withhold exact waiting time information from their customers? A transport example," Transportation Research Part B: Methodological, Elsevier, vol. 166(C), pages 128-142.
    • Handle: RePEc:eee:transb:v:166:y:2022:i:c:p:128-142
    DOI: 10.1016/j.trb.2022.10.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S019126152200162X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.trb.2022.10.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Iñaki Aguirre & Simon Cowan & John Vickers, 2010. "Monopoly Price Discrimination and Demand Curvature," American Economic Review, American Economic Association, vol. 100(4), pages 1601-1615, September.
    2. Naor, P, 1969. "The Regulation of Queue Size by Levying Tolls," Econometrica, Econometric Society, vol. 37(1), pages 15-24, January.
    3. Athanasia Manou & Pelin G. Canbolat & Fikri Karaesmen, 2017. "Pricing in a Transportation Station with Strategic Customers," Production and Operations Management, Production and Operations Management Society, vol. 26(9), pages 1632-1645, September.
    4. Varian, Hal R, 1985. "Price Discrimination and Social Welfare," American Economic Review, American Economic Association, vol. 75(4), pages 870-875, September.
    5. Antonis Economou & Athanasia Manou, 2013. "Equilibrium balking strategies for a clearing queueing system in alternating environment," Annals of Operations Research, Springer, vol. 208(1), pages 489-514, September.
    6. Stein, William E. & Rapoport, Amnon & Seale, Darryl A. & Zhang, Hongtao & Zwick, Rami, 2007. "Batch queues with choice of arrivals: Equilibrium analysis and experimental study," Games and Economic Behavior, Elsevier, vol. 59(2), pages 345-363, May.
    7. Senthil K. Veeraraghavan & Laurens G. Debo, 2011. "Herding in Queues with Waiting Costs: Rationality and Regret," Manufacturing & Service Operations Management, INFORMS, vol. 13(3), pages 329-346, July.
    8. Fosgerau, Mogens & Engelson, Leonid, 2011. "The value of travel time variance," Transportation Research Part B: Methodological, Elsevier, vol. 45(1), pages 1-8, January.
    9. A. Glazer & R. Hassin, 1987. "Equilibrium Arrivals in Queues with Bulk Service at Scheduled Times," Transportation Science, INFORMS, vol. 21(4), pages 273-278, November.
    10. Edward Ignall & Peter Kolesar, 1974. "Optimal Dispatching of an Infinite-Capacity Shuttle: Control at a Single Terminal," Operations Research, INFORMS, vol. 22(5), pages 1008-1024, October.
    11. Athanasia Manou & Antonis Economou & Fikri Karaesmen, 2014. "Strategic Customers in a Transportation Station: When Is It Optimal to Wait?," Operations Research, INFORMS, vol. 62(4), pages 910-925, August.
    12. Moshe Haviv & Liron Ravner, 2021. "A survey of queueing systems with strategic timing of arrivals," Queueing Systems: Theory and Applications, Springer, vol. 99(1), pages 163-198, October.
    13. Pengfei Guo & Paul Zipkin, 2007. "Analysis and Comparison of Queues with Different Levels of Delay Information," Management Science, INFORMS, vol. 53(6), pages 962-970, June.
    14. Achim I. Czerny & Anming Zhang, 2015. "Third‐degree price discrimination in the presence of congestion externality," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(4), pages 1430-1455, November.
    15. Refael Hassin & Ricky Roet-Green, 2017. "The Impact of Inspection Cost on Equilibrium, Revenue, and Social Welfare in a Single-Server Queue," Operations Research, INFORMS, vol. 65(3), pages 804-820, June.
    16. Hassin, Refael, 1986. "Consumer Information in Markets with Random Product Quality: The Case of Queues and Balking," Econometrica, Econometric Society, vol. 54(5), pages 1185-1195, September.
    17. Achim I. Czerny & Anming Zhang, 2015. "Third-degree price discrimination in the presence of congestion externality," Canadian Journal of Economics, Canadian Economics Association, vol. 48(4), pages 1430-1455, November.
    18. Ming Hu & Yang Li & Jianfu Wang, 2018. "Efficient Ignorance: Information Heterogeneity in a Queue," Management Science, INFORMS, vol. 64(6), pages 2650-2671, June.
    19. Edelson, Noel M & Hildebrand, David K, 1975. "Congestion Tolls for Poisson Queuing Processes," Econometrica, Econometric Society, vol. 43(1), pages 81-92, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dimitrios Logothetis & Antonis Economou, 2023. "The impact of information on transportation systems with strategic customers," Production and Operations Management, Production and Operations Management Society, vol. 32(7), pages 2189-2206, July.
    2. Ayane Nakamura & Tuan Phung-Duc, 2023. "Equilibrium Analysis for Batch Service Queueing Systems with Strategic Choice of Batch Size," Mathematics, MDPI, vol. 11(18), pages 1-22, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dimitrios Logothetis & Antonis Economou, 2023. "The impact of information on transportation systems with strategic customers," Production and Operations Management, Production and Operations Management Society, vol. 32(7), pages 2189-2206, July.
    2. Pengfei Guo & Moshe Haviv & Zhenwei Luo & Yulan Wang, 2022. "Optimal queue length information disclosure when service quality is uncertain," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 1912-1927, May.
    3. Opher Baron & Xiaole Chen & Yang Li, 2023. "Omnichannel Services: The False Premise and Operational Remedies," Management Science, INFORMS, vol. 69(2), pages 865-884, February.
    4. Opher Baron & Antonis Economou & Athanasia Manou, 2022. "Increasing social welfare with delays: Strategic customers in the M/G/1 orbit queue," Production and Operations Management, Production and Operations Management Society, vol. 31(7), pages 2907-2924, July.
    5. Ming Hu & Yang Li & Jianfu Wang, 2018. "Efficient Ignorance: Information Heterogeneity in a Queue," Management Science, INFORMS, vol. 64(6), pages 2650-2671, June.
    6. Olga Bountali & Antonis Economou, 2019. "Strategic customer behavior in a two-stage batch processing system," Queueing Systems: Theory and Applications, Springer, vol. 93(1), pages 3-29, October.
    7. Canbolat, Pelin G., 2020. "Bounded rationality in clearing service systems," European Journal of Operational Research, Elsevier, vol. 282(2), pages 614-626.
    8. Tesnim Naceur & Yezekael Hayel, 2020. "Deterministic state-based information disclosure policies and social welfare maximization in strategic queueing systems," Queueing Systems: Theory and Applications, Springer, vol. 96(3), pages 303-328, December.
    9. Rouba Ibrahim, 2018. "Sharing delay information in service systems: a literature survey," Queueing Systems: Theory and Applications, Springer, vol. 89(1), pages 49-79, June.
    10. Olga Bountali & Antonis Economou, 2019. "Equilibrium threshold joining strategies in partially observable batch service queueing systems," Annals of Operations Research, Springer, vol. 277(2), pages 231-253, June.
    11. David Lingenbrink & Krishnamurthy Iyer, 2019. "Optimal Signaling Mechanisms in Unobservable Queues," Operations Research, INFORMS, vol. 67(5), pages 1397-1416, September.
    12. Sun, Ke, 2024. "Strategic responses to the aggregator platform: Pricing and information sharing," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).
    13. Bountali, Olga & Economou, Antonis, 2017. "Equilibrium joining strategies in batch service queueing systems," European Journal of Operational Research, Elsevier, vol. 260(3), pages 1142-1151.
    14. Shiliang Cui & Zhongbin Wang & Luyi Yang, 2020. "The Economics of Line-Sitting," Management Science, INFORMS, vol. 66(1), pages 227-242, January.
    15. Zhongbin Wang & Yunan Liu & Lei Fang, 2022. "Pay to activate service in vacation queues," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2609-2627, June.
    16. Antonis Economou, 2022. "How much information should be given to the strategic customers of a queueing system?," Queueing Systems: Theory and Applications, Springer, vol. 100(3), pages 421-423, April.
    17. Hassin, Refael & Roet-Green, Ricky, 2018. "Cascade equilibrium strategies in a two-server queueing system with inspection cost," European Journal of Operational Research, Elsevier, vol. 267(3), pages 1014-1026.
    18. Qiuping Yu & Gad Allon & Achal Bassamboo & Seyed Iravani, 2018. "Managing Customer Expectations and Priorities in Service Systems," Management Science, INFORMS, vol. 64(8), pages 3942-3970, August.
    19. Luyi Yang & Laurens G. Debo & Varun Gupta, 2019. "Search Among Queues Under Quality Differentiation," Management Science, INFORMS, vol. 65(8), pages 3605-3623, August.
    20. Ziani, Sofiane & Rahmoune, Fazia & Radjef, Mohammed Said, 2015. "Customers’ strategic behavior in batch arrivals M2/M/1 queue," European Journal of Operational Research, Elsevier, vol. 247(3), pages 895-903.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:transb:v:166:y:2022:i:c:p:128-142. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/548/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.