The math behind Line-Sitting
Have you ever got frustrated waiting in a line to avail some service? Almost, always right. It is always a displeasing experience to wait in line to avail a service. Whether it be to check-in for your flight or to renew your expired passport. We encounter queues in many situations of our daily life. In this article, we explore the economics of a new service called line-sitting. Line sitting service providers provide line sitters who can wait for you on your behalf in any queue. This is a growing concept in many parts of the world. All the insights that I talk about in this article are derived from a recently published paper in Management Science 2019. (See citation in the reference section below)
Many service providers capitalize on the frustration experienced by customers who wait in line and sell premium services or priority services where customers can pay extra to skip the queue. Thus the service provider is able to bring in price discrimination to increase her revenue by providing priority services. There are multiple examples of priority services that we see in our everyday life. Many airlines sell priority services in the form of priority check-in, priority baggage collection etc. One of the key issues with priority services is the reduction in overall consumer welfare. Thus it is not a win-win for both service providers and customers. Please note that overall consumer welfare takes into account all the consumers, including those who avail priority service and those who do not avail priority service.
Line sitting services are provided by 3rd party line sitting companies. This means customers can rent line sitters who will wait on behalf of the customer in the queue. The entry of 3rd party line-sitting service into the market poses many challenging questions. Will the service provider benefit in any way due to the availability of line-sitting service in the market ? What will be the optimal price to be charged for line-sitting? Can line-sitting and priority service exist together ? These questions have been answered using an analytical study of a stylized mathematical model in the below paper.
The study interestingly reveals that in many situations, the availability line sitting service helps the service provider to increase her revenue. Another interesting result is that, under certain conditions, it might be more beneficial for the service provider to discard priority service in the presence of line sitting services. Line-sitting services can be a feasible strategy to implement to create a win-win-win situation for the service provider, consumer and 3rd party line sitting company.
You may read the below paper for the detailed analysis:
Reference: Cui, S., Wang, Z., & Yang, L. (2019). The economics of line-sitting. Management Science.
The above paper is the primary source of information for this article.