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Extensions of Cost Analyses for the Basic Service System

In: Congestion-Prone Services Under Quality Competition

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  • Dong-Joo Moon

    (Seoul National University)

Abstract

Chapter 6 introduced the full cost approach that estimates various cost functions of public and private congestion prone service systems. That chapter illustrated analyses to develop the cost functions using an example of the basic service system. The cost analyses showed that a certain cost function for both public and private services has an identical expression, except for one difference in value-of-servicetimes that reflect consumer perception about the value of qualitative attributes packed in a service. The cost functions for a public service use the social valueof- service-time, which estimates the decrease in consumer utilities for a one-unit increase in service time as a unit of money. The cost functions for private service, in contrast, apply the private value-of-service-time, which reflects the revenue loss for each unit increase in service time.

Suggested Citation

  • Dong-Joo Moon, 2011. "Extensions of Cost Analyses for the Basic Service System," Advances in Spatial Science, in: Congestion-Prone Services Under Quality Competition, edition 127, chapter 0, pages 153-178, Springer.
    • Handle: RePEc:spr:adspcp:978-3-642-20189-9_7
    DOI: 10.1007/978-3-642-20189-9_7
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