A leader–follower model for discrete competitive facility location |
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| Affiliation: | 1. Faculty of Engineering and Sciences, Universidad Adolfo Ibañez, Santiago, Chile;2. Escola de Artes, Ciências e Humanidades, Universidade de São Paulo, São Paulo, Brazil;1. Department of Industrial Engineering, College of Engineering, Shahed University, Tehran, Iran;2. Department of Mathematics, Faculty of Science, Shahed University, Tehran, Iran;3. Department of Industrial Engineering, College of Engineering, Bu-Ali Sina University, Hamedan, Iran;1. Novosibirsk State University, Novosibirsk 630090, Russia;2. Sobolev Institute of Mathematics, Novosibirsk 630090, Russia |
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| Abstract: | In this paper we investigate a leader–follower (Stackelberg equilibrium) competitive location model. The competitive model is based on the concept of cover. Each facility attracts consumers within a “sphere of influence” defined by a “radius of influence.” The leader and the follower, each has a budget to be spent on the expansion of their chains either by improving their existing facilities or constructing new ones. We find the best strategy for the leader assuming that the follower, knowing the action taken by the leader, will react by investing his budget to maximize his market share. The objective of the leader is to maximize his market share following the follower׳s reaction. |
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| Keywords: | Facility location Competitive location Cover models Stackelberg equilibrium Leader–follower |
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