Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/27229
Title: On the downs-thomson paradox in a self-financing two-tier queuing system
Authors: Guo, P 
Lindsey, R
Zhang, ZG
Keywords: Downs-Thomson paradox
Equilibrium arrival rates
Pricing and capacity decisions
Queuing system
Two-tier service system
Issue Date: 2014
Publisher: INFORMS Inst.for Operations Res.and the Management Sciences
Source: Manufacturing and Service Operations Management, 2014, v. 16, no. 2, p. 315-322 How to cite?
Journal: Manufacturing and Service Operations Management 
Abstract: We model a two-tier queuing system with free and toll service options as two parallel M/M/1 servers. We solve for the welfare-maximizing toll service capacity and toll subject to the constraint that the toll service cover its costs. If the free and toll services are both used in equilibrium, a larger free-service capacity implies longer expected waiting time for the free service and lower welfare: an analogue to the Downs-Thomson paradox in transportation economics. The paradox is caused by the presence of scale economies in the toll service combined with the requirement that it be self-financing.
URI: http://hdl.handle.net/10397/27229
ISSN: 1526-5498
DOI: 10.1287/msom.2014.0476
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