Market and Locational Equilibrium for Two Competitors

Martine Labbé and S. Louis Hakimi
Additional contact information
Martine Labbé: Erasmus Universiteit, Rotterdam, The Netherlands
S. Louis Hakimi: University of California, Davis, California

Operations Research, 1991, vol. 39, issue 5, 749-756

Abstract: We consider a two-stage location and allocation game involving two competing firms. The firms first select the location of their facility on a network. Then the firms optimally select the quantities each wishes to supply to the markets, which are located at the vertices of the network. The criterion for optimality for each firm is maximizing its profit, which is the total revenue minus the production and transportation costs. Under reasonable assumptions regarding the revenue, the production cost and the transportation cost functions, we show that there is a Nash equilibrium for the quantities offered at the markets by each firm. Furthermore, if the quantities supplied (at the equilibrium) by each firm at each market are positive, then there is also a Nash locational equilibrium, i.e., no firm finds it advantageous to change its location.

Keywords: facilities/equipment planning: competitive location; games/group decisions; noncooperative: two-stage game; networks/graphs: location (search for similar items in EconPapers)
Date: 1991
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.39.5.749 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:39:y:1991:i:5:p:749-756

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().