Do Tips Create Market Inefficiency? The Case of Restaurant Industry | Chapter 6 | New Advances in Business, Management and Economics Vol. 1

In this chapter, the author investigates the economic implications of restaurant tipping, that is, whether such practices induce market distortions. The author uses consumer choice theory to demonstrate the effects of tipping on consumer behavior and concludes that tipping does discourage consumer demand for restaurant meals, and hence leads to a substitution effect favoring grocery shopping. For this reason, this leads to a deadweight loss, thus undermining overall market efficiency. The author’s economic theoretical analysis shows how tipping distorts the price signal and harms consumer welfare. The main contribution of the chapter is to give a good theoretical background into restaurant management, and the theoretical model lays the groundwork for future empirical studies to validate the findings.

 

Author (s) Details

 

Tin-Chun Lin
School of Business and Economics, Indiana University – Northwest, Gary, IN 46408, USA.

 

Please see the book here:- https://doi.org/10.9734/bpi/nabme/v1/3803

Restaurant Tipping and Consumer Behavior: An Economic Theoretical Analysis | Chapter 7 | Current Strategies in Economics and Management Vol. 2

In this chapter, I applied the theory of consumer choice to model the relationship between restaurant tipping and consumer behavior. Using this model, I demonstrated how consumer behavior responds to restaurant tipping and how tipping affects consumer-utility among different types of consumers and economic efficiency. The economic theoretical analysis reveals that tipping discourages customers’ demand for restaurant meals, which in turn creates bigger excess burden in the market.

Author(s) Details

Tin-Chun Lin
School of Business and Economics, Indiana University Northwest, Gary, IN 46408, USA

View Book :- http://bp.bookpi.org/index.php/bpi/catalog/book/185