Optimization of Price and Quality in Service Systems.
ResearchPublished 1971
Discussion of techniques for quantitative determination of the optimal prices and service quality in a wide class of systems. A probabilistic demand model sensitive to both price and quality is derived from the microeconomic concept that a consumer chooses the service that maximizes the difference between willingness to pay and price. This model is then aggregated to obtain a partial equilibrium macroeconomic model of demand. A Bayesian technique is developed for using data to reduce uncertainty about consumers' values. Following this, criteria are listed for optimizing prices and choosing among alternative qualities of service. A stochastic approximation is applied to finding optimal prices in service systems; in the cases tested, only a marginal increase in aggregate social welfare is obtained from establishing multiple priorities. A major shift occurs, however, in the incidence of benefits. 184 pp. Ref.
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- Copyright: RAND Corporation
- Availability: Available
- Year: 1971
- Print Format: Paperback
- Paperback Pages: 184
- Paperback Price: $40.00
- Document Number: P-4590
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Wirt, John G., Optimization of Price and Quality in Service Systems. RAND Corporation, P-4590, 1971. As of September 11, 2024: https://www.rand.org/pubs/papers/P4590.html
Wirt, John G., Optimization of Price and Quality in Service Systems. Santa Monica, CA: RAND Corporation, 1971. https://www.rand.org/pubs/papers/P4590.html. Also available in print form.
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