ABSTRACT
Operations management literature on strategic queueing models naturally focuses on profit maximization. The part of that research that considers a monopolistic server is described in this chapter.
Let S∗ denote the maximum social welfare obtainable in Naor’s model. Clearly, S∗ is an upper bound on profit in the system. The firm can achieve this profit if and only if the following conditions hold: 1. Customers join according to the SO threshold n∗, and 2. all welfare generated in the system goes to the firm. These conditions are not satisfied by Naor’s optimal static price when n∗ > 1.1
Four mechanisms that achieve profit S∗ are known, as described below. The first three are discussed in [229].
