Extensions of Cost Analyses for the Basic Service System

Dong-Joo Moon ()
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Dong-Joo Moon: Seoul National University

Chapter Chapter 7 in Congestion-Prone Services Under Quality Competition, 2011, pp 153-178 from Springer

Abstract: Abstract Chapter 6 introduced the full cost approach that estimates various cost functions of public and private congestion prone service systems. That chapter illustrated analyses to develop the cost functions using an example of the basic service system. The cost analyses showed that a certain cost function for both public and private services has an identical expression, except for one difference in value-of-servicetimes that reflect consumer perception about the value of qualitative attributes packed in a service. The cost functions for a public service use the social valueof- service-time, which estimates the decrease in consumer utilities for a one-unit increase in service time as a unit of money. The cost functions for private service, in contrast, apply the private value-of-service-time, which reflects the revenue loss for each unit increase in service time.

Keywords: Cost Function; Service Time; Service System; Variable Cost; Optimal Capacity (search for similar items in EconPapers)
Date: 2011
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DOI: 10.1007/978-3-642-20189-9_7

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