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Consumer Information in Markets with Random Product Quality: The Case of Queues and Balking

Refael Hassin

Abstract

We consider a revenue maximizing server who has the opportunity to suppress information on actual queue length, leaving demanders to decide on joining the queue on the basis of the known distribution of waiting times. We address the following second best problem: If suppression, but not pricing, can be socially controlled, is it socially optimal to prevent suppression? We show that it may be, but is not always, socially optimal to prevent suppression and that it is never optimal to encourage suppression when the revenue maximizer prefers to reveal the queue length.