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Competition in service industries

Gad Allon, 2006
Faculty Advisor: Awi Federgruen


This dissertation addresses competition in service industries. Increasingly, firms in service industries differentiate themselves on the basis of the waiting time their customers experience, along with their price levels and other service attributes (location, quality of service etc.). The dependence of waiting times on demand volumes and capacity levels, in turn, depends in a fundamental way on the operational characteristics of the service facilities, as queueing theory has taught us.

When customers select a specific firm, the selection process amounts to a tradeoff among three categories of service attributes: (1) the price; (2) the waiting time standard; (3) all other attributes. In the second chapter of this dissertation entitled 'Competition in Service Industries', we analyze a general market for an industry of competing service providers. Other than through intrinsic and unalterable service characteristics, firms differentiate themselves in the market in terms of their price levels and the waiting time their customers experience. We first characterize the equilibrium behavior in three competition models: Simultaneous Competition, where firms select their prices and service levels simultaneously, Price First, where firms first select their prices, and then their service levels (after observing the pricing decisions made by the rest of the firms), and Service Level First, where the order of the decisions is reversed. We then rank and compare the resulting prices and service levels generated by each of the three competition models.

In the third chapter of this dissertation entitled 'Service Competition with General Queueing Facilities', we investigate how a service industry's competitive behavior depends on the characteristics of the service providers' queueing systems. We provide a unifying approach to investigate various standard single stage systems covering the spectrum from M/M/1 to general G/GI/s systems, along with open Jackson networks to represent multistage service systems.

Doctoral Program News

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The August issue of Ideas at Work features research that doctoral candidate Colleen Honigsberg led in conjunction with Sharon Katz.

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Wazlawek featured in Ideas at Work

Abbie Wazlawek's joint research with Professor Daniel Ames is featured in the June 24th, 2014 edition of Ideas at Work

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Ethan Rouen featured in Ideas at Work

Ethan Rouen's joint research with Professor Dan Amiram is featured in the May 15th, 2014 edition of Ideas at Work

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Rivas Wins Fellowship

The PhD program is proud to congratulate Miguel Duro Rivas, who was awarded the Nasdaq Educational Foundation Doctoral Dissertation Fellowship.

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Wong wins Deloitte Fellowship

We are proud to announce that Yu Ting (Forester) Wong is one of the recipients of the 2014 Deloitte Foundation Doctoral Fellowship in Accounting.

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The PhD Program Congratulates John Yao

PhD student John Yao was a finalist in the 2013 M&SOM (Manufacturing & Service Operations Management) student paper competition.

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Honigsberg Named Postdoctoral Fellow

The PhD program is proud to congratulate Colleen Honigsberg, who was named the Postdoctoral Fellow in Corporate Governance at the Millstein Center at Columbia Law School in October 2013

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