Customer equilibrium and optimal pricing in an M/G/1 queue with heterogeneous rewards and waiting cost rates

Abstract

We consider an unobservable M/G/1 queue in which customers are allowed to join or balk upon arrival. The service provider charges the same admission fee to all joining customers. All joining customers receive a reward from completion of service and incur a waiting cost. The reward and waiting cost rate are random, however the customers know their own values upon arrival. We characterize the customer's equilibrium strategy and the optimal prices associated with profit and social welfare maximization. (C) 2020 Elsevier B.V. All rights reserved.