Incorporating competitors' reactions in facility location decisions: A market equilibrium approach

Roger L. Tobin, Tan Miller, Terry L. Friesz

Research output: Contribution to journalArticlepeer-review

7 Scopus citations

Abstract

When a firm locates a new plant, and begins producing and shipping product to markets, this typically stimulates reactions by other firms supplying those markets. This suggests that to truly make a profit maximizing location decision, a firm must anticipate the market's reaction in the location decision-making process. In this paper, we review the development of a class of models designed to determine the profit maximizing location decision for a firm seeking to establish a manufacturing facility (or facilities) on a network characterized by either competitive or oligopolistic economic competition. One particular model from this class is presented, and the importance of anticipating the reaction to a location decision is illustrated through numerical examples of the model.

Original languageEnglish (US)
Pages (from-to)239-253
Number of pages15
JournalLocation Science
Volume3
Issue number4
DOIs
StatePublished - Dec 1995

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Transportation

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