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research article

Market Sharing Dynamics Between Two Service Providers

Gallay, Olivier
•
Hongler, Max-Olivier  
2008
European Journal of Operational Research

We study the market partition between two distinct firms that deliver services to waiting-time sensitive customers. In our model, the incoming customers select a firm on the basis of its posted price, the expected waiting time and its brand. More specifically, we quantify by a cost any departure from the ideal brand expected by each incoming customer. Considering that the two underlying queueing processes operate under high traffic regimes, we analyze the market sharing dynamics by using a diffusion process. As a function of control parameters, such as the waiting and brand departure costs or the incoming traffic intensity, we are able to analytically characterize a transition between an Hotelling-like regime (dominated by brand considerations) and a deadline type regime (dominated by waiting time considerations). The market sharing dynamics is described by the time evolution of a boundary point, which time evolution belongs to the class of noise-induced phase transitions, so far widely discussed in physics, chemistry and biology.

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Type
research article
DOI
10.1016/j.ejor.2007.06.018
Web of Science ID

WOS:000255820700016

Author(s)
Gallay, Olivier
Hongler, Max-Olivier  
Date Issued

2008

Publisher

Elsevier

Published in
European Journal of Operational Research
Volume

190

Issue

1

Start page

241

End page

254

Subjects

stochastic processes

•

Hotelling model

•

heavy traffic queueing dynamics

•

multiplicative noise

•

noise-induced phase transition

Editorial or Peer reviewed

REVIEWED

Written at

EPFL

EPFL units
LPM  
Available on Infoscience
February 7, 2007
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/2276
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