Efficiency Analysis of Cournot Competition in Service Industries with Congestion

• 成果类型: Article
• 署名作者: Perakis, Georgia; Sun, Wei
• 署名单位: Massachusetts Institute of Technology (MIT); International Business Machines (IBM); IBM USA
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2014.1943
• 发表日期: 2014
• 页码: 2684-2700
• 关键词: efficiency analysis; Price of anarchy; congestion; Convex costs; service industries

摘要

We consider Cournot competition in the presence of congestion effects. Our model consists of several service providers with differentiated services, each competing for users who are sensitive to both price and congestion. We distinguish two types of congestion effects, depending on whether spillover costs exist, that is, where one service provider's congestion cost increases with the other providers' output level. We quantify the efficiency of an unregulated oligopoly with respect to the optimal social welfare with tight upper and lower bounds. We show that, when there is no spillover, the welfare loss in an unregulated oligopoly is limited to 25% of the social optimum, even in the presence of highly convex costs. On the other hand, when spillover cost is present, there does not exist a constant lower bound on the efficiency of an unregulated oligopoly, even with affine cost. We show that the efficiency depends on the relative magnitude between the marginal spillover cost and the marginal benefit to consumers.