The Follower Competitive Location Problem with Comparison-Shopping

Vladimir Marianov, H. A. Eiselt, Armin Lüer-Villagra

Research output: Contribution to journalArticle

Abstract

In competitive settings, firms locate their stores to take advantage of consumers’ behavior to maximize their market share. A common behavior is comparison-shopping: in this behavioral pattern, consumers visit multiple stores that sell non-identical products, which are mutual substitutes, before making their purchase decision. This behavior has never been included in location-prescribing models for competitive firms. Given existing branches of one firm, we address the location problem of a follower firm that locates its own branches. We present insights on the instance used by ReVelle in his maximum capture formulation, provide computational experience with one thousand 100-node instances, and consider a realistic case using a 353-node network of Santiago, Chile. The results are compared in terms of the demand captured by each firm and the locational patterns that result from different consumer behaviors.

Original languageEnglish
Pages (from-to)367-393
Number of pages27
JournalNetworks and Spatial Economics
Volume20
Issue number2
DOIs
Publication statusAccepted/In press - 1 Jan 2019

Keywords

  • Comparison-shopping
  • Competitive location
  • Follower problem

ASJC Scopus subject areas

  • Software
  • Computer Networks and Communications
  • Artificial Intelligence

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