Pricing Analysis in GeoGeo1 Queueing System

Abstract EN

This paper studies the equilibrium behavior of customers and optimal pricing strategies of servers in a Geo/Geo/1 queueing system.

Two common pricing mechanisms are considered.

The first one is called ex-post payment (EPP) scheme where the server collects tolls proportional to queue times, and the second one is called ex-ante payment (EAP) scheme where the server charges a flat fee for the total service.

The server sets the toll price to maximize its own profit.

It is found that, under a customer’s choice equilibrium, the two toll mechanisms are equivalent from the economic point of view.

Finally, we present several numerical experiments to investigate the effects of system parameters on the equilibrium customer joining rate and servers’ profits.