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A model for equilibrium in some service-provider user-set interactions

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Abstract

We propose a model for interaction between a user-set (market) and a service-provider (firm) when the offered demand is sensitive to the offered Quality of Service which in turn depends on the offered demand. We show that, under fairly mild conditions, an equilibrium point or an equilibrium set exists either when the service-provider bases its operational decisions as per a revenue optimal policy of an average reward Markov decision model or when it uses a discounted reward Markov decision model. We also consider the cases when the firm has to meet functional constraints on consumption of resources for its operations. If an equilibrium set exists, then the interaction can suitably be interpreted as one explanation of the business cycles phenomena. We illustrate these and related issues via a model for vehicle relocation system which may be of independent interest.

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Acknowledgments

We sincerely thank the Reviewers for their comments and suggestions that helped us improve the presentation of this paper. We also thank the Guest Editors of this Special Issue for their encouragement. Both Rajesh and Abdul were partially supported by a Teaching Assistantship offered by Govt. of India during their MTech program.

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Authors and Affiliations

  1. Industrial Engineering and Operations Research, Indian Institute of Technology Bombay, Mumbai, 400 076, India

    Nandyala Hemachandra

  2. Carnegie Mellon University, Pittsburgh, USA

    Kamma Sri Naga Rajesh

  3. JDA Software, Hyderabad, India

    Mohd. Abdul Qavi

Authors
  1. Nandyala Hemachandra
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  2. Kamma Sri Naga Rajesh
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  3. Mohd. Abdul Qavi
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Correspondence to Nandyala Hemachandra.

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Hemachandra, N., Rajesh, K.S.N. & Qavi, M.A. A model for equilibrium in some service-provider user-set interactions. Ann Oper Res 243, 95–115 (2016). https://doi.org/10.1007/s10479-015-2037-8

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  • DOI: https://doi.org/10.1007/s10479-015-2037-8

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