Location planning under different market conditions
International Journal of Industrial Engineering : Theory Applications and Practice 1 (9): 23-35 (2002-03-01)
In location theory, two different classes of problems are usually considered separately: on the one hand, there are "classical" optimization problems like the Simple Plant Location Problem, and on the other hand, competitive problems are discussed in Hotelling's tradition. Here, a more unified approach to location planning under different market conditions is developed on a game-theoretical basis. Through a new classification scheme, the relations between the different problem classes are established. The oligopolistic planning situation on spatially separated markets turns out to be the basic case; monopoly models and models for the perfect competition situation as well as non-spatial models are shown to be special cases. A formal example in location and quantity strategies is presented to illustrate the results of the analysis.