Gainers and Losers in Priority Services

Research output: Contribution to journalArticlepeer-review


We analyze the implications of priority service (PS) on customers’ welfare. In monopoly markets, PS can often decrease consumer surplus and can even yield a loss of welfare to all consumers. This happens despite its efficiency gains, as monopolists levy in revenue more than the total efficiency gains. PS can increase consumer surplus if it expands the consumption coverage—thatis,ifitintroducesnewcustomerswhowould not purchase the service otherwise. In duopoly markets, the price competition over PS can be severely eroded. Under homogeneity, firms act as if they were monopolists serving half of the market.

Original languageAmerican English
Pages (from-to)3103-3155
Number of pages53
JournalJournal of Political Economy
Issue number11
StatePublished - Nov 2023

Bibliographical note

Publisher Copyright:
© 2023 The University of Chicago. All rights reserved.


Dive into the research topics of 'Gainers and Losers in Priority Services'. Together they form a unique fingerprint.

Cite this