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Consumer choice in competitive location models: Formulations and heuristics

A new direction of research in Competitive Location theory incorporates theories of Consumer Choice Behavior in its models. Following this direction, this paper studies the importance of consumer behavior with respect to distance or transportation costs in the optimality of locations obtained by traditional Competitive Location models. To do this, it considers different ways of defining a key parameter in the basic Maximum Capture model (MAXCAP). This parameter will reflect various ways of taking into account distance based on several Consumer Choice Behavior theories. The optimal locations and the deviation in demand captured when the optimal locations of the other models are used instead of the true ones, are computed for each model. A metaheuristic based on GRASP and Tabu search procedure is presented to solve all the models. Computational experience and an application to 55-node network are also presented.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 290.

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Date of creation: May 1998
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Handle: RePEc:upf:upfgen:290
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  1. M J Hodgson, 1978. "Toward more realistic allocation in location - allocation models: an interaction approach," Environment and Planning A, Pion Ltd, London, vol. 10(11), pages 1273-1285, November.
  2. D Serra & H A Eiselt & G Laporte & C S ReVelle, 1999. "Market capture models under various customer-choice rules," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 26(5), pages 741-750, September.
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