Technical Report Socially Optimal Service hours with Special Offers

Kim, Hyewon  ,  Sandoh, Hiroaki

15-11pp.1 - 11 , 2015-05 , Graduate School of Economics and Osaka School of International Public Policy (OSIPP) Osaka University
Description
It is very important for service industries to decentralize consumers at peak time, and thereby to increase sales not at peak time. This study discusses an optimal number of business hours for a service industry when the service provider offers a price discount immediately after the opening time and just before the closing time. For a specific ideal service time distribution of consumers, the optimal opening and closing time are explored. Clarified are the conditions under which an optimal number of business hours exists to maximize the social welfare. Numerical examples are also presented to illustrate the theoretical underpinnings of the proposed model.

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