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Uncapacitated Plant Location Under Alternative Spatial Price Policies

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Author Info

  • Pierre Hanjoul

    (Department of Geography, Université Catholique de Louvain, Place Louis Pasteur 3, B-1348 Louvain-la-Neuve, Belgium)

  • Pierre Hansen

    (RUTCOR, Rutgers University, New Brunswick, New Jersey 08903)

  • Dominique Peeters

    (Department of Geography, Université Catholique de Louvain, Place Louis Pasteur 3, B-1348 Louvain-la-Neuve, Belgium)

  • Jacques-Francois Thisse

    (CORE, Université Catholique de Louvain, Voie du Roman Pays 34, B-1348 Louvain-la-Neuve, Belgium)

Abstract

Given a spatial system of clients' demand functions, this paper proposes solution methods to determine the price(s), the number, the locations, the sizes, and the market areas of the plants supplying the clients in order to maximize the profit of the firm. Three alternative spatial price policies are considered: (i) uniform mill pricing, in which the same price is charged to the clients at the plant door, (ii) uniform delivered pricing, in which clients pay the same delivered price irrespective of their locations, and (iii) spatial discriminatory pricing, which is such that the firm sets client-specific prices based on their locations. Computational results are reported.

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File URL: http://dx.doi.org/10.1287/mnsc.36.1.41
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 36 (1990)
Issue (Month): 1 (January)
Pages: 41-57

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Handle: RePEc:inm:ormnsc:v:36:y:1990:i:1:p:41-57

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Related research

Keywords: location theory; economic analysis;

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Cited by:
  1. Bai, Yun & Ouyang, Yanfeng & Pang, Jong-Shi, 2012. "Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium," Energy Economics, Elsevier, vol. 34(5), pages 1623-1633.
  2. Daniel Serra & Charles Revelle, 1997. "Competitive location and pricing on networks," Economics Working Papers 219, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Drezner, Zvi & Wesolowsky, George O., 1996. "Location-allocation on a line with demand-dependent costs," European Journal of Operational Research, Elsevier, vol. 90(3), pages 444-450, May.
  4. Espejo, Inmaculada & Marín, Alfredo & Rodríguez-Chía, Antonio M., 2012. "Closest assignment constraints in discrete location problems," European Journal of Operational Research, Elsevier, vol. 219(1), pages 49-58.
  5. Phillip Lederer, 2011. "Competitive Delivered Pricing by Mail-Order and Internet Retailers," Networks and Spatial Economics, Springer, vol. 11(2), pages 315-342, June.
  6. Tombak, Mihkel M., 1995. "Multinational plant location as a game of timing," European Journal of Operational Research, Elsevier, vol. 86(3), pages 434-451, November.
  7. Böhme, Enrico & Müller, Christopher, 2012. "Monopolistic Location Choice in Two-Sided Industries," MPRA Paper 41761, University Library of Munich, Germany.

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