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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.

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