Uncertainty, Waiting Time, and Capacity Utilization
A Stochastic Theory of Product Quality
Bibliographic Data
| ID | 10178738 |
|---|---|
| Authors | Arthur De Vany (corresponding author) |
| Year | 1976 |
| Volume | 84 |
| Issue | 3 |
| Pages | 523-541 |
| Publication date | 1976-06-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/260457 |
| OpenAlex | W1996695448 |
| Language | EN |
| Citations received | 7 |
| References cited | 2 |
The behavior of a monopoly is analyzed in the following setting. Search creates a stochastic stream of customers. Searchers observe the queue and leave if it is too long. Production is random. In the optimal solution, waiting time, effective demand, and the utilization of capacity are jointly determined. Product quality in the form of waiting time is endogenous to the model, and it is found that price or capacity changes affect both the quantity and the quality of output. If an equilibrium exists, there is excess capacity. Price equals marginal cost, but monopoly produces too little capacity and output unless profits are zero
Capacity utilization · Econometrics · Economics · Marginal cost · Marginal product · Microeconomics · Monopoly · Product (mathematics · Production (economics · Quality (philosophy · Queue · Advanced Queuing Theory Analysis · Computer Science · Economic theories and models · Mathematics · Supply Chain and Inventory Management
Convenient Prices and Price Rigidity
The Economics of Quality
Market Structure, Investment, and Technical Efficiencies in Mobile Telecommunications
Dynamic Bank Expansion
An Anomaly in the Service Industry
Harold Hotelling and the principle of minimum differentiation
Spatial competition with free entry, Chamberlinian tangencies, and social efficiency
| Unique citing works | 7 |
|---|---|
| Citations per year | 0,16 |
| Citation span | 1983 - 2024 (42) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 7 |