Li, Lode; Lee, Yew Sing Pricing and delivery-time performance in a competitive environment. (English) Zbl 0805.90031 Manage. Sci. 40, No. 5, 633-646 (1994). Summary: We present a model of market competition in which customer preferences are over not only price and quality but also delivery speed. This allows a study of market demand and firms’ decisions on price, quality, technology and responsiveness in a competitive environment. When demand arises, a customer chooses the firm that maximizes its expected utility of price, quality and response time. The demand function for each firm is derived by analyzing a queueing system with competing servers. We then study price competition among firms with differentiated processing rates. In the equilibrium, the firm with a higher processing rate always enjoys a price premium, and, further, enjoy a larger market share when its opponent also has adequate processing rate to serve all the customers alone. Cited in 24 Documents MSC: 91B26 Auctions, bargaining, bidding and selling, and other market models 90B22 Queues and service in operations research Keywords:two-server queues; time-sensitive customers; pricing; delivery-time competition; Nash equilibrium; market competition; queueing system with competing servers; equilibrium PDFBibTeX XMLCite \textit{L. Li} and \textit{Y. S. Lee}, Manage. Sci. 40, No. 5, 633--646 (1994; Zbl 0805.90031) Full Text: DOI