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Reaction Function Based Dynamic Location Modeling in Stackelberg–Nash–Cournot Competition

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Author Info

  • Tan Miller

    ()

  • Terry Friesz

    ()

  • Roger Tobin

    ()

  • Changhyun Kwon

    ()

Abstract

We formulate a dynamic facility location model for a firm locating on a discrete network. It is assumed that this locating firm will act as the leader firm in an industry characterized by Stackelberg leader–follower competition. The firm’s I competitors are assumed to act as Cournot firms and are each assumed to operate under the assumption of zero conjectural variation with respect to their I–1 Cournot competitors. Using sensitivity analysis of variational inequalities within a hierachical mathematical programming approach, we develop reaction function based dynamic models to optimize the Stackelberg firm’s location decision. In the second half of this paper, we use these models to illustrate through a numerical example the insights yielded by our approach. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s11067-006-9013-4
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Bibliographic Info

Article provided by Springer in its journal Networks and Spatial Economics.

Volume (Year): 7 (2007)
Issue (Month): 1 (March)
Pages: 77-97

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Handle: RePEc:kap:netspa:v:7:y:2007:i:1:p:77-97

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Web page: http://www.springerlink.com/link.asp?id=106607

Related research

Keywords: Dynamic Stackelberg equilibrium location modeling; Reaction functions;

References

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  1. Dockner, Engelbert J, 1992. "A Dynamic Theory of Conjectural Variations," Journal of Industrial Economics, Wiley Blackwell, vol. 40(4), pages 377-95, December.
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Cited by:
  1. Paul Berglund & Changhyun Kwon, 2014. "Solving a Location Problem of a Stackelberg Firm Competing with Cournot-Nash Firms," Networks and Spatial Economics, Springer, vol. 14(1), pages 117-132, March.

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