A Model of Queue-Scalping
Forthcoming, Management Science
60 Pages Posted: 31 Aug 2018 Last revised: 13 Oct 2020
Date Written: August 22, 2018
Recent years have witnessed the rise of queue-scalping in congestion-prone service systems. A queue-scalper has no material interest in the primary service but proactively enters the queue in hopes of selling his spot later. This paper develops a queueing-game-theoretic model of queue-scalping and generates the following insights. First, we find that queues with either a very small or very large demand volume may be immune to scalping, whereas queues with a non-extreme demand volume may attract the most scalpers. Second, in the short run, when capacity is fixed, the presence of queue-scalping often increases social welfare; can increase or reduce system throughput, but tends to reduce consumer surplus. Third, in the long run, the presence of queue-scalping motivates a welfare-maximizing service provider to adjust capacity using a "pull-to-center" rule, increasing (reducing) capacity if the original capacity level is low (high). When the service provider responds by expanding capacity, the presence of queue-scalping can increase social welfare, system throughput, and even consumer surplus in the long run, reversing its short-run detrimental effect on customers. Despite these potential benefits, such capacity expansion does little to mitigate scalping and may only generate more scalpers in the queue. Finally, we compare and contrast queue-scalping with other common mechanisms in practice, namely, (centralized) pay-for-priority, line-sitting, and callbacks.
Keywords: service operations, queue-scalping, pricing, priority, speculation
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