Customer Equilibrium and Optimal Strategies in an M/M/1 Queue with Dynamic Service Control

We consider the problem of customer equilibrium strategies in an M/M/1 queue under dynamic service control. The service rate switches between a low and a high value depending on system congestion. Arriving customers do not observe the system state at the moment of arrival. We show that due to service rate variation, the customer equilibrium strategy is not generally unique, and derive an upper bound on the number of possible equilibria. For the problem of social welfare optimization, we numerically analyze the relationship between the optimal arrival rate, which maximizes the overall welfare of the customers, and the equilibrium ones as a function of various parameter values. We finally derive analytic solutions for the special case where the service rate switch occurs when the queue ceases to be empty.