A Model of Queue-Scalping

Forthcoming, Management Science

60 Pages Posted: 31 Aug 2018 Last revised: 13 Oct 2020

See all articles by Luyi Yang

Luyi Yang

University of California, Berkeley - Haas School of Business

Zhongbin Wang

Nankai University - Business School

Shiliang Cui

Georgetown University - McDonough School of Business

Date Written: August 22, 2018

Abstract

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

Suggested Citation

Yang, Luyi and Wang, Zhongbin and Cui, Shiliang, A Model of Queue-Scalping (August 22, 2018). Forthcoming, Management Science, Available at SSRN: https://ssrn.com/abstract=3237102 or http://dx.doi.org/10.2139/ssrn.3237102

Luyi Yang (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Zhongbin Wang

Nankai University - Business School ( email )

Baidi Road
Tianjin, 300071
China

Shiliang Cui

Georgetown University - McDonough School of Business ( email )

Washington, DC 20057
United States

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