Document Type

Report

Publication Date

5-1993

Number

249

Abstract

This note describes and investigates an equilibrium model of a service market in which customers search among many firms for ones offering acceptable combinations of money price and expected waiting time. Although neither firms nor customers possess market power, the noncooperative equilibrium of the model is inefficient: Forcing customers to be more selective in their choices of suppliers can produce Pareto improvements in welfare. This result is due to an externality, in queue accession decisions, which others have identified in related contexts..

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