An optimal mechanism charging for priority in a queue

Moshe Haviv*, Eyal Winter

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter, for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. This is repeated for the case where customers are heterogeneous. The mechanisms are based on the fact that once some customers get priority, its value of the other gets even higher.

Original languageAmerican English
Pages (from-to)304-308
Number of pages5
JournalOperations Research Letters
Volume48
Issue number3
DOIs
StatePublished - May 2020
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2020 Elsevier B.V.

Keywords

  • Charging mechanisms
  • Priorities
  • Queues

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