Competition in service industries

A general market for an industry of competing service facilities is analyzed. Different types of competition and equilibrium behavior arise, depending on the industry dynamics through which the firms make their strategic choices. In one case, the firms make all choices simulataneously through simultaneous competition (SC) and in other case, firms may choose their waiting-time standards, selecting their prices in a second stage, named service-level first competition (SF). As a third alternative, the sequence of strategic choices may be reversed through price-first competition (PF). It is found that if firms choose and announce their service levels before choosing their price, this will result in higher but more expensive service by all competitors.