Pricing and capacity allocation under asymmetric information using Paris Metro Pricing
by Antonios Printezis, Apostolos Burnetas, Gopalakrishnan Mohan
International Journal of Operational Research (IJOR), Vol. 5, No. 3, 2009

Abstract: We consider a Paris Metro Pricing (PMP) approach for providing service to two classes of customers differentiated by their delay sensitivity. We develop a leader-follower game, where the leader is the service provider who sets the price and the customers respond by deciding whether to join or balk. We derive the customer behaviour as the Nash equilibrium of a multi-person game and obtain the revenue maximising price pairs for all combinations of arrival rates from each class to each server. We finally derive the capacity threshold in such domain and its impact on customer accessibility to the product or service.

Online publication date: Sat, 16-May-2009

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