Co-opetition in Service Clusters with Waiting-Area Entertainment

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dc.contributorXuchuan Yuan, Tinglong Dai, Lucy Gongtao Chen, Srinagesh Gavirneni
dc.date.accessioned2019-05-16T18:34:00Z
dc.date.available2019-05-16T18:34:00Z
dc.date.updated2019-05-16T18:33:59Z
dc.description.abstractProblem Definition: Unoccupied waiting feels longer than it actually is. Service providers operationalize this psychological principle by offering entertainment options in waiting areas. A service cluster with a common space provides firms with an opportunity to cooperate in the investment for providing entertainment options while competing on other service dimensions. Academic / Practical Relevance: Our paper contributes to the literature by being the first to examine co- opetition in a service setting, in addition to developing a novel model of waiting-area entertainment. It also sheds new light on the emerging practice of service clusters and small-footprint retailing. Methodology: Using a queueing theoretic approach, we develop a parsimonious model of co-opetition in a service cluster with a common space. Results: By comparing the case of co-opetition with two benchmarks (monopoly, and duopoly competition), we demonstrate that a service provider that would otherwise be a local monopolist can achieve higher prof- itability by joining a service cluster and engaging in co-opetition. Achieving such benefits, however, requires a cost-allocation scheme that properly addresses an efficiency-fairness tradeoff—the pursuit of fairness may backfire and lead to even lower profitability than under pure competition. Managerial Implications: We show that as much as co-opetition facilitates resource sharing in a service clus- ter, it heightens price competition. Furthermore, as the intensity of price competition increases, surprisingly, service providers may opt to charge higher service fees, albeit while providing a higher entertainment level.
dc.identifier.citationXuchuan Yuan, Tinglong Dai, Lucy Gongtao Chen, Srinagesh Gavirneni. (05/15/2019). "Co-opetition in Service Clusters with Waiting-Area Entertainment." Manufacturing & service operations management : M & SOM.
dc.identifier.urihttp://jhir.library.jhu.edu/handle/1774.2/61352
dc.languageen
dc.titleCo-opetition in Service Clusters with Waiting-Area Entertainment
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