Network facility-location models in Stackelberg-Nash-Cournot spatial competition

Tan Miller, Roger L. Tobin, Terry Lee Friesz

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

A hierarchical mathematical programming approach is combined with sensitivity analysis (of variational inequalities) to formulate a facility-location model for a firm competing on a discrete network. It is assumed that the locating firm will act as the leader firm in an industry characterized by Stackelberg leader-follower(s) oligopolistic competition. The other n competitors in this industry are assumed to act as Cournot firms that each operate under the Cournot assumption of zero conjectural variation with respect to their n - 1 Cournot competitors. It is further assumed that the n Cournot firms will react to the location/production/shipping activities of the Stackelberg firm. Therefore, when the Stackelberg firm makes its location, production, and shipping decisions it takes into account the reaction of the n Cournot firms to its (the Stackelberg firm's) integrated location and distribution decisions. Specifically, a Cournot reaction function is developed and imbedded in the Stackelberg firm's profit-maximizing objective function to project the anticipated reaction of the Cournot firms to the Stackelberg firm's location decision.

Original languageEnglish (US)
Pages (from-to)277-291
Number of pages15
JournalPapers in Regional Science
Volume71
Issue number3
DOIs
StatePublished - Jul 1 1992

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Environmental Science (miscellaneous)

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