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Location and quality selection for new facilities on a network market

Author

Listed:
  • Rafael Suárez-Vega
  • Dolores Santos-Peñate
  • Pablo Dorta-González

Abstract

In this paper, the problem of determining the location and quality of new facilities in a network market is analyzed. Customers make their choice according to an attraction function, which is directly proportional to the facility quality level and decreasing with respect to the distance between customers and facilities. In order to solve the location problem, both an integer linear program and an exact algorithm are proposed. These algorithms are embedded into a branch and bound-based algorithm for solving the joint location–quality problem. An illustrative example where customers present different distance perception is presented. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Rafael Suárez-Vega & Dolores Santos-Peñate & Pablo Dorta-González, 2014. "Location and quality selection for new facilities on a network market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 537-560, March.
    • Handle: RePEc:spr:anresc:v:52:y:2014:i:2:p:537-560
    DOI: 10.1007/s00168-014-0598-0
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    References listed on IDEAS

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    Keywords

    C61; L13;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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