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Uncapacitated Plant Location Under Alternative Spatial Price Policies


  • 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)


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.

Suggested Citation

  • Pierre Hanjoul & Pierre Hansen & Dominique Peeters & Jacques-Francois Thisse, 1990. "Uncapacitated Plant Location Under Alternative Spatial Price Policies," Management Science, INFORMS, vol. 36(1), pages 41-57, January.
  • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:1:p:41-57

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    References listed on IDEAS

    1. Leech, Dennis, 1985. "Ownership Concentration and the Theory of the Firm : A Simple-Game-Theoretic Approach to Applied US Corporations in the 1930's," The Warwick Economics Research Paper Series (TWERPS) 262, University of Warwick, Department of Economics.
    2. Guillermo Owen, 1972. "Multilinear Extensions of Games," Management Science, INFORMS, vol. 18(5-Part-2), pages 64-79, January.
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    Cited by:

    1. 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.
    2. He, Zhou & Cheng, T.C.E. & Dong, Jichang & Wang, Shouyang, 2016. "Evolutionary location and pricing strategies for service merchants in competitive O2O markets," European Journal of Operational Research, Elsevier, vol. 254(2), pages 595-609.
    3. Fattahi, Mohammad & Mahootchi, Masoud & Govindan, Kannan & Moattar Husseini, Seyed Mohammad, 2015. "Dynamic supply chain network design with capacity planning and multi-period pricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 81(C), pages 169-202.
    4. Daniel Serra & Charles Revelle, 1997. "Competitive location and pricing on networks," Economics Working Papers 219, Department of Economics and Business, Universitat Pompeu Fabra.
    5. Sedghi, Nafiseh & Shavandi, Hassan & Abouee-Mehrizi, Hossein, 2017. "Joint pricing and location decisions in a heterogeneous market," European Journal of Operational Research, Elsevier, vol. 261(1), pages 234-246.
    6. repec:spr:annopr:v:242:y:2016:i:2:d:10.1007_s10479-015-1924-3 is not listed on IDEAS
    7. Geunes, Joseph & Shen, Zuo-Jun Max & Emir, Akin, 2007. "Planning and approximation models for delivery route based services with price-sensitive demands," European Journal of Operational Research, Elsevier, vol. 183(1), pages 460-471, November.
    8. Phillip Lederer, 2011. "Competitive Delivered Pricing by Mail-Order and Internet Retailers," Networks and Spatial Economics, Springer, vol. 11(2), pages 315-342, June.
    9. Böhme, Enrico & Müller, Christopher, 2012. "Monopolistic Location Choice in Two-Sided Industries," MPRA Paper 41761, University Library of Munich, Germany.
    10. repec:pal:jorsoc:v:59:y:2008:i:11:d:10.1057_palgrave.jors.2602493 is not listed on IDEAS
    11. 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.
    12. 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.
    13. Ahmadi-Javid, Amir & Hoseinpour, Pooya, 2015. "A location-inventory-pricing model in a supply chain distribution network with price-sensitive demands and inventory-capacity constraints," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 82(C), pages 238-255.
    14. 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.
    15. Zhang, Yue, 2015. "Designing a retail store network with strategic pricing in a competitive environment," International Journal of Production Economics, Elsevier, vol. 159(C), pages 265-273.

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    location theory; economic analysis;


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