Price competition, free entry, and welfare in congested markets

Melo, Emerson

doi:10.1016/j.geb.2013.10.006

Cited by 5 publications

(6 citation statements)

References 25 publications

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“…More recently, Melo (2014) established the existence and uniqueness of a pure strategy price equilibrium in a congested market with free entry and price competition. His results predict congested markets will have a greater number of firms than is socially optimal.…”

Section: Related Literaturementioning

confidence: 99%

Pricing and waiting time decisions in a health care market with private and public provision

Alves

2019

Journal of Applied Economics

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This paper describes a duopoly market for healthcare where one of the two providers is publicly owned and charges a price of zero, while the other sets a price so as to maximize its profit. Both providers are subject to congestion in the form of an M/M/1 queue, and they serve patient-consumers who have randomly distributed unit costs of time. Consumer demand (as market share) for both providers is obtained and described. The private provider's pricing decision is explored, equilibrium existence is proven, and conditions for uniqueness presented. Comparative statics for demand are presented. Social welfare functions are described and the welfare maximizing condition obtained. More detailed results are then obtained for cases when costs follow uniform and Kumaraswamy distributions. Numerical simulations are then performed for these distributions, employing several parameter values, demonstrating the private provider's pricing decision and its relationship with social welfare.

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Section: Related Literaturementioning

confidence: 99%

Pricing and waiting time decisions in a health care market with private and public provision

Alves

2019

Journal of Applied Economics

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“…Before stating the main result of this section, we define the matrixQ(v) = (Q if ) i =t,f ∈F as follows: 16 We point that an equilibrium notion called Markovian traffic equilibrium has been introduced in Baillon and Cominetti [2008] and extended to oligopoly pricing under congestion effects in Melo [2014]. However, neither Baillon and Cominetti [2008] nor Melo [2014] analyze the problem that is studied in this paper.…”

Section: Price Competition and Networkmentioning

confidence: 99%

Imperfect Price Competition in Networks

Melo

2017

SSRN Journal

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“…Research on congestion dates back to Pigou (1920). Yet most economic and engineering models of congestible transportation facilities still assume that users are small in the sense that each one controls a negligible fraction of total traffic (see, e.g., Melo, 2014). This is a realistic assumption for passenger trips in private vehicles.…”

Section: Introductionmentioning

confidence: 99%

Equilibrium in a dynamic model of congestion with large and small users

Lindsey

Palma

Silva

2019

Transportation Research Part B: Methodological

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Individual users often control a significant share of total traffic flows. Examples include airlines, rail and maritime freight shippers, urban goods delivery companies and passenger transportation network companies. These users have an incentive to internalize the congestion delays their own vehicles impose on each other by adjusting the timing of their trips. We investigate simultaneous trip-timing decisions by large users and small users in a dynamic model of congestion. Unlike previous work, we allow for heterogeneity of trip-timing preferences and for the presence of small users such as individual commuters and fringe airlines. We derive the optimal fleet departure schedule for a large user as a best-response to the aggregate departure rate of other users. We show that when the vehicles in a large user's fleet have a sufficiently dispersed distribution of desired arrival times, there may exist a pure-strategy Nash-equilibrium (PSNE) in which the large user schedules vehicles when there is a queue. This resolves the problem of non-existence of a PSNE identified in Silva et al. (2017) for the case of symmetric large users. We also develop some examples to identify under what conditions a PSNE exists. The examples illustrate how self-internalization of congestion by a large user can affect the nature of equilibrium and the travel costs that it and other users incur.

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Price competition, free entry, and welfare in congested markets

Cited by 5 publications

References 25 publications

Pricing and waiting time decisions in a health care market with private and public provision

Pricing and waiting time decisions in a health care market with private and public provision

Imperfect Price Competition in Networks

Equilibrium in a dynamic model of congestion with large and small users

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