STOR Colloquium: Srinagesh Gavirneni, Cornell

Title: Co-opetition in Service Clusters with Waiting-Area Entertainment

 Link to paper:  Co-opetition-Service-Clusters

Abstract: Unoccupied waiting feels longer than it actually is. Service providers operationalize this psychological principle by offering entertainment options in waiting areas. In a service cluster with a shared waiting space, firms  have an opportunity to cooperate in the investment for providing entertainment options while competing on other service dimensions. In this paper, we develop a parsimonious model of co-opetition in a service cluster with shared entertainment options for waiting customers (e.g., a boardwalk). By comparing the case of co-opetition with two benchmarks (monopoly, and duopoly competition), we demonstrate that a service provider, which would otherwise be a local monopolist, can achieve a higher pro fit by joining a service cluster and engaging in co-opetition: we numerically show that the average firm profit under co-opetition is 7.65% higher than under monopoly. Achieving such benefits, however, requires a cost-allocation scheme properly addressing a fairness-efficiency tradeoff. A pursuit of fairness may backfire and lead to even lower profits than under pure competition. We show that as much as co-opetition facilitates resource sharing in a service cluster, it also 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.

Refreshments will be served at 3:00pm in the 3^rd floor lounge of Hanes Hall

Nagesh Gavirneni is a professor of operations management in the Samuel Curtis Johnson Graduate School of Management at Cornell University. His research interests are in the areas of supply chain management, inventory control, production scheduling, simulation and optimization. He is now using these models and methodologies to solve problems in healthcare, agriculture and humanitarian logistics in developing countries. Previously, he was an assistant professor in the Kelley School of Business at Indiana University, the chief algorithm design engineer of SmartOps, a Software Architect at Maxager Technology, Inc. and a research scientist with Schlumberger. He has an undergraduate degree in Mechanical Engineering from IIT-Madras, a Master’s degree from Iowa State University, and a Ph.D. from Carnegie Mellon University.