Socially Optimal Service hours with Special Offers

Hyewon Kim () and Hiroaki Sandoh ()
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Hyewon Kim: Graduate School of Economics, Osaka University
Hiroaki Sandoh: Graduate School of Economics, Osaka University

No 15-11, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: It is very important for service industries to decentralize consumers at peak time, and thereby to increase sales not at peak time. This study discusses an optimal number of business hours for a service industry when the service provider offers a price discount immediately after the opening time and just before the closing time. For a specific ideal service time distri- bution of consumers, the optimal opening and closing time are explored. Clarified are the conditions under which an optimal number of business hours exists to maximize the social welfare. Numerical examples are also presented to illustrate the theoretical underpinnings of the proposed model.

Keywords: Price discount; Service hours; Ideal service time distribution; Social welfare (search for similar items in EconPapers)
JEL-codes: L80 M20 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2015-05
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