IDEAS home Printed from https://ideas.repec.org/a/kap/netspa/v20y2020i2d10.1007_s11067-019-09481-6.html
   My bibliography  Save this article

The Follower Competitive Location Problem with Comparison-Shopping

Author

Listed:
  • Vladimir Marianov

    (Pontificia Universidad Católica de Chile)

  • H. A. Eiselt

    (University of New Brunswick)

  • Armin Lüer-Villagra

    (Universidad Andres Bello)

Abstract

In competitive settings, firms locate their stores to take advantage of consumers’ behavior to maximize their market share. A common behavior is comparison-shopping: in this behavioral pattern, consumers visit multiple stores that sell non-identical products, which are mutual substitutes, before making their purchase decision. This behavior has never been included in location-prescribing models for competitive firms. Given existing branches of one firm, we address the location problem of a follower firm that locates its own branches. We present insights on the instance used by ReVelle in his maximum capture formulation, provide computational experience with one thousand 100-node instances, and consider a realistic case using a 353-node network of Santiago, Chile. The results are compared in terms of the demand captured by each firm and the locational patterns that result from different consumer behaviors.

Suggested Citation

  • Vladimir Marianov & H. A. Eiselt & Armin Lüer-Villagra, 2020. "The Follower Competitive Location Problem with Comparison-Shopping," Networks and Spatial Economics, Springer, vol. 20(2), pages 367-393, June.
    • Handle: RePEc:kap:netspa:v:20:y:2020:i:2:d:10.1007_s11067-019-09481-6
    DOI: 10.1007/s11067-019-09481-6
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11067-019-09481-6
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11067-019-09481-6?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. B. Curtis Eaton & Richard G. Lipsey, 1975. "The Principle of Minimum Differentiation Reconsidered: Some New Developments in the Theory of Spatial Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(1), pages 27-49.
    2. Hakimi, S. Louis, 1983. "On locating new facilities in a competitive environment," European Journal of Operational Research, Elsevier, vol. 12(1), pages 29-35, January.
    3. Necati Aras & Hande Küçükaydın, 2017. "Bilevel Models on the Competitive Facility Location Problem," Springer Optimization and Its Applications, in: Lina Mallozzi & Egidio D'Amato & Panos M. Pardalos (ed.), Spatial Interaction Models, pages 1-19, Springer.
    4. Asher Wolinsky, 1983. "Retail Trade Concentration Due to Consumers' Imperfect Information," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 275-282, Spring.
    5. Edward C. Prescott & Michael Visscher, 1977. "Sequential Location among Firms with Foresight," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 378-393, Autumn.
    6. Drezner, Zvi, 1982. "Competitive location strategies for two facilities," Regional Science and Urban Economics, Elsevier, vol. 12(4), pages 485-493, November.
    7. H. A. Eiselt & Vladimir Marianov & Tammy Drezner, 2015. "Competitive Location Models," Springer Books, in: Gilbert Laporte & Stefan Nickel & Francisco Saldanha da Gama (ed.), Location Science, edition 127, chapter 0, pages 365-398, Springer.
    8. Eaton, B Curtis & Lipsey, Richard G, 1982. "An Economic Theory of Central Places," Economic Journal, Royal Economic Society, vol. 92(365), pages 56-72, March.
    9. Nimrod Megiddo, 1981. "The Maximum Coverage Location Problem," Discussion Papers 490, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. Marianov, Vladimir & Eiselt, H.A. & Lüer-Villagra, Armin, 2018. "Effects of multipurpose shopping trips on retail store location in a duopoly," European Journal of Operational Research, Elsevier, vol. 269(2), pages 782-792.
    11. Wen-Chung Guo & Fu-Chuan Lai, 2014. "Spatial competition with quadratic transport costs and one online firm," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(1), pages 309-324, January.
    12. Nagy, Gabor & Salhi, Said, 2007. "Location-routing: Issues, models and methods," European Journal of Operational Research, Elsevier, vol. 177(2), pages 649-672, March.
    13. Stahl, Konrad, 1982. "Differentiated Products, Consumer Search, and Locational Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 31(1-2), pages 97-113, September.
    14. Jagpal, Sharan, 2008. "Fusion for Profit: How Marketing and Finance Can Work Together to Create Value," OUP Catalogue, Oxford University Press, number 9780195371055.
    15. Vladimir Marianov & H. A. Eiselt, 2016. "On agglomeration in competitive location models," Annals of Operations Research, Springer, vol. 246(1), pages 31-55, November.
    16. H. A. Eiselt, 2011. "Equilibria in Competitive Location Models," International Series in Operations Research & Management Science, in: H. A. Eiselt & Vladimir Marianov (ed.), Foundations of Location Analysis, chapter 0, pages 139-162, Springer.
    17. A. P. Lerner & H. W. Singer, 1937. "Some Notes on Duopoly and Spatial Competition," Journal of Political Economy, University of Chicago Press, vol. 45(2), pages 145-145.
    18. Richard Church & Charles R. Velle, 1974. "The Maximal Covering Location Problem," Papers in Regional Science, Wiley Blackwell, vol. 32(1), pages 101-118, January.
    19. David L. Huff, 1963. "A Probabilistic Analysis of Shopping Center Trade Areas," Land Economics, University of Wisconsin Press, vol. 39(1), pages 81-90.
    20. Marianov, Vladimir & Rí­os, Miguel & Icaza, Manuel José, 2008. "Facility location for market capture when users rank facilities by shorter travel and waiting times," European Journal of Operational Research, Elsevier, vol. 191(1), pages 32-44, November.
    21. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.
    22. Small, Kenneth A., 2012. "Valuation of travel time," Economics of Transportation, Elsevier, vol. 1(1), pages 2-14.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tammy Drezner & Morton O’Kelly & Zvi Drezner, 2023. "Multipurpose shopping trips and location," Annals of Operations Research, Springer, vol. 321(1), pages 191-208, February.
    2. Renatas Špicas & Airidas Neifaltas & Rasa Kanapickienė & Greta Keliuotytė-Staniulėnienė & Deimantė Vasiliauskaitė, 2023. "Estimating the Acceptance Probabilities of Consumer Loan Offers in an Online Loan Comparison and Brokerage Platform," Risks, MDPI, vol. 11(7), pages 1-30, July.
    3. Méndez-Vogel, Gonzalo & Marianov, Vladimir & Lüer-Villagra, Armin & Eiselt, H.A., 2023. "Store location with multipurpose shopping trips and a new random utility customers’ choice model," European Journal of Operational Research, Elsevier, vol. 305(2), pages 708-721.
    4. H. A. Eiselt & Vladimir Marianov, 2020. "Stability of utility functions and apportionment rules in location models," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 28(3), pages 772-792, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vladimir Marianov & H. A. Eiselt, 2016. "On agglomeration in competitive location models," Annals of Operations Research, Springer, vol. 246(1), pages 31-55, November.
    2. Marianov, Vladimir & Eiselt, H.A., 2024. "Fifty Years of Location Theory - A Selective Review," European Journal of Operational Research, Elsevier, vol. 318(3), pages 701-718.
    3. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    4. Méndez-Vogel, Gonzalo & Marianov, Vladimir & Lüer-Villagra, Armin & Eiselt, H.A., 2023. "Store location with multipurpose shopping trips and a new random utility customers’ choice model," European Journal of Operational Research, Elsevier, vol. 305(2), pages 708-721.
    5. Tammy Drezner & Zvi Drezner & Dawit Zerom, 2020. "Facility Dependent Distance Decay in Competitive Location," Networks and Spatial Economics, Springer, vol. 20(4), pages 915-934, December.
    6. Braid, Ralph M., 2006. "The equilibrium locations of three stores with different selections of differentiated products," Economics Letters, Elsevier, vol. 93(1), pages 31-36, October.
    7. Shiode, Shogo & Drezner, Zvi, 2003. "A competitive facility location problem on a tree network with stochastic weights," European Journal of Operational Research, Elsevier, vol. 149(1), pages 47-52, August.
    8. Tammy Drezner & Zvi Drezner & Pawel Kalczynski, 2020. "Gradual cover competitive facility location," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 42(2), pages 333-354, June.
    9. Dolores R. Santos-Peñate & Clara M. Campos-Rodríguez & José A. Moreno-Pérez, 2020. "A Kernel Search Matheuristic to Solve The Discrete Leader-Follower Location Problem," Networks and Spatial Economics, Springer, vol. 20(1), pages 73-98, March.
    10. Eiselt, H.A. & Marianov, Vladimir, 2020. "Maximizing political vote in multiple districts," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    11. Wieland, Thomas, 2014. "Räumliches Einkaufsverhalten und Standortpolitik im Einzelhandel unter Berücksichtigung von Agglomerationseffekten: Theoretische Erklärungsansätze, modellanalytische Zugänge und eine empirisch-ökonome," MPRA Paper 77163, University Library of Munich, Germany.
    12. Tolga H. Seyhan & Lawrence V. Snyder & Ying Zhang, 2018. "A New Heuristic Formulation for a Competitive Maximal Covering Location Problem," Transportation Science, INFORMS, vol. 52(5), pages 1156-1173, October.
    13. Granot, Daniel & Granot, Frieda & Raviv, Tal, 2010. "On competitive sequential location in a network with a decreasing demand intensity," European Journal of Operational Research, Elsevier, vol. 205(2), pages 301-312, September.
    14. Braid, Ralph M., 1999. "The socially optimal locations of three stores with stockouts or limited product selections," Economics Letters, Elsevier, vol. 64(3), pages 363-368, September.
    15. Lüer-Villagra, Armin & Marianov, Vladimir & Eiselt, H.A. & Méndez-Vogel, Gonzalo, 2022. "The leader multipurpose shopping location problem," European Journal of Operational Research, Elsevier, vol. 302(2), pages 470-481.
    16. Tammy Drezner & Morton O’Kelly & Zvi Drezner, 2023. "Multipurpose shopping trips and location," Annals of Operations Research, Springer, vol. 321(1), pages 191-208, February.
    17. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.
    18. T Drezner & Z Drezner & P Kalczynski, 2011. "A cover-based competitive location model," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(1), pages 100-113, January.
    19. Eiselt, H. A. & Laporte, Gilbert, 1997. "Sequential location problems," European Journal of Operational Research, Elsevier, vol. 96(2), pages 217-231, January.
    20. Gentile, José & Alves Pessoa, Artur & Poss, Michael & Costa Roboredo, Marcos, 2018. "Integer programming formulations for three sequential discrete competitive location problems with foresight," European Journal of Operational Research, Elsevier, vol. 265(3), pages 872-881.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:netspa:v:20:y:2020:i:2:d:10.1007_s11067-019-09481-6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.