Competitive location and capacity decisions for firms serving time-sensitive customers

Anthony M. Kwasnica, Euthemia Stavrulaki

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

In this article we explore how two competing firms locate and set capacities to serve time-sensitive customers. Because customers are time-sensitive, they may decline to place an order from either competitor if their expected waiting time is large. We develop a two-stage game where firms set capacities and then locations, and show that three types of subgame perfect equilibria are possible: local monopoly (in which each customer is served by a single firm, but some customers may be left unserved), constrained local monopoly (in which firms serve the entire interval of customers but do not compete with each other), and constrained competition (in which firms also serve the entire interval of customers, but now compete for some customers). We perform a comparative statics analysis to illustrate differences in the equilibrium behavior of a duopolist and a coordinated monopolist.

Original languageEnglish (US)
Number of pages1
JournalNaval Research Logistics
Volume55
Issue number7
DOIs
StatePublished - Oct 1 2008

Fingerprint

Competitive Location
Static analysis
Customers
Entire
Subgame Perfect Equilibrium
Comparative Statics
Interval
Static Analysis
Business
Comparative Analysis
Waiting Time
Game

All Science Journal Classification (ASJC) codes

  • Modeling and Simulation
  • Ocean Engineering
  • Management Science and Operations Research

Cite this

@article{c5e31997302a4bf9b8278ce6ea7597b6,
title = "Competitive location and capacity decisions for firms serving time-sensitive customers",
abstract = "In this article we explore how two competing firms locate and set capacities to serve time-sensitive customers. Because customers are time-sensitive, they may decline to place an order from either competitor if their expected waiting time is large. We develop a two-stage game where firms set capacities and then locations, and show that three types of subgame perfect equilibria are possible: local monopoly (in which each customer is served by a single firm, but some customers may be left unserved), constrained local monopoly (in which firms serve the entire interval of customers but do not compete with each other), and constrained competition (in which firms also serve the entire interval of customers, but now compete for some customers). We perform a comparative statics analysis to illustrate differences in the equilibrium behavior of a duopolist and a coordinated monopolist.",
author = "Kwasnica, {Anthony M.} and Euthemia Stavrulaki",
year = "2008",
month = "10",
day = "1",
doi = "10.1002/nav.20316",
language = "English (US)",
volume = "55",
journal = "Naval Research Logistics",
issn = "0894-069X",
publisher = "John Wiley and Sons Inc.",
number = "7",

}

Competitive location and capacity decisions for firms serving time-sensitive customers. / Kwasnica, Anthony M.; Stavrulaki, Euthemia.

In: Naval Research Logistics, Vol. 55, No. 7, 01.10.2008.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Competitive location and capacity decisions for firms serving time-sensitive customers

AU - Kwasnica, Anthony M.

AU - Stavrulaki, Euthemia

PY - 2008/10/1

Y1 - 2008/10/1

N2 - In this article we explore how two competing firms locate and set capacities to serve time-sensitive customers. Because customers are time-sensitive, they may decline to place an order from either competitor if their expected waiting time is large. We develop a two-stage game where firms set capacities and then locations, and show that three types of subgame perfect equilibria are possible: local monopoly (in which each customer is served by a single firm, but some customers may be left unserved), constrained local monopoly (in which firms serve the entire interval of customers but do not compete with each other), and constrained competition (in which firms also serve the entire interval of customers, but now compete for some customers). We perform a comparative statics analysis to illustrate differences in the equilibrium behavior of a duopolist and a coordinated monopolist.

AB - In this article we explore how two competing firms locate and set capacities to serve time-sensitive customers. Because customers are time-sensitive, they may decline to place an order from either competitor if their expected waiting time is large. We develop a two-stage game where firms set capacities and then locations, and show that three types of subgame perfect equilibria are possible: local monopoly (in which each customer is served by a single firm, but some customers may be left unserved), constrained local monopoly (in which firms serve the entire interval of customers but do not compete with each other), and constrained competition (in which firms also serve the entire interval of customers, but now compete for some customers). We perform a comparative statics analysis to illustrate differences in the equilibrium behavior of a duopolist and a coordinated monopolist.

UR - http://www.scopus.com/inward/record.url?scp=55049122116&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=55049122116&partnerID=8YFLogxK

U2 - 10.1002/nav.20316

DO - 10.1002/nav.20316

M3 - Article

AN - SCOPUS:55049122116

VL - 55

JO - Naval Research Logistics

JF - Naval Research Logistics

SN - 0894-069X

IS - 7

ER -