An optimal mechanism charging for priority in a queue

Moshe Haviv and Eyal Winter ()

Papers from arXiv.org

Abstract: We derive a revenue-maximizing scheme that charges customers who are homogeneous with respect to their waiting cost parameter for a random fee in order to become premium customers. This scheme incentivizes all customers to purchase priority, each at his/her drawn price. We also design a revenue-maximizing scheme for the case where customers are heterogeneous with respect to their waiting cost parameter. Now lower cost parameter customers are encouraged to join the premium class at a low price: Given that, those with high cost parameter would be willing to pay even more for this privilege.

Date: 2020-02
New Economics Papers: this item is included in nep-des
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Citations: View citations in EconPapers (3)

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