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Equilibrium Analysis of Disaggregate Facility Choice Systems Subject to Congestion-Elastic Demand

Author

Listed:
  • Hau Leung Lee

    (Stanford University, Stanford, California)

  • Morris A. Cohen

    (University of Pennsylvania, Philadelphia, Pennsylvania)

Abstract

This paper considers the impact of congestion on the spatial distribution of customer utilization of service facilities in a stochastic-dynamic environment. Previous research has assumed that the rate of demand for service is independent of the attributes of the facilities. We consider the more general case in which facility utilization is determined both by individual facility choice (based on the stochastic disaggregate choice mechanism) and by the rate of demand for service. We develop generalized results for proving that equilibria exist and describe sufficient conditions for the uniqueness and global stability of these equilibria. These conditions depend upon the elasticity of demand with respect to the level of congestion at the facilities, and on whether customers are congestion-averse or are congestion-loving. Finally, we examine special cases when these conditions are satisfied.

Suggested Citation

  • Hau Leung Lee & Morris A. Cohen, 1985. "Equilibrium Analysis of Disaggregate Facility Choice Systems Subject to Congestion-Elastic Demand," Operations Research, INFORMS, vol. 33(2), pages 293-311, April.
    • Handle: RePEc:inm:oropre:v:33:y:1985:i:2:p:293-311
    DOI: 10.1287/opre.33.2.293
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    Cited by:

    1. Hwang, Johye & Gao, Long & Jang, Wooseung, 2010. "Joint demand and capacity management in a restaurant system," European Journal of Operational Research, Elsevier, vol. 207(1), pages 465-472, November.
    2. Marianov, Vladimir & Rí­os, Miguel & Icaza, Manuel José, 2008. "Facility location for market capture when users rank facilities by shorter travel and waiting times," European Journal of Operational Research, Elsevier, vol. 191(1), pages 32-44, November.
    3. Boronico, Jess S, 1998. "An Investigation into the Costs and Benefits of Reliability of Service," Omega, Elsevier, vol. 26(1), pages 99-114, February.
    4. Teck H. Ho & Yu-Sheng Zheng, 2004. "Setting Customer Expectation in Service Delivery: An Integrated Marketing-Operations Perspective," Management Science, INFORMS, vol. 50(4), pages 479-488, April.
    5. Grossman, Thomas A. & Brandeau, Margaret L., 2002. "Optimal pricing for service facilities with self-optimizing customers," European Journal of Operational Research, Elsevier, vol. 141(1), pages 39-57, August.
    6. Hai Yang & S. C. Wong, 2000. "A Continuous Equilibrium Model for Estimating Market Areas of Competitive Facilities with Elastic Demand and Market Externality," Transportation Science, INFORMS, vol. 34(2), pages 216-227, May.

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