Solving a Location Problem of a Stackelberg Firm Competing with Cournot-Nash Firms

Paul Berglund and Changhyun Kwon

Networks and Spatial Economics, 2014, vol. 14, issue 1, 117-132

Abstract: We study a discrete facility location problem on a network, where the locating firm acts as the leader and other competitors as the followers in a Stackelberg-Cournot-Nash game. To maximize expected profits the locating firm must solve a mixed-integer problem with equilibrium constraints. Finding an optimal solution is hard for large problems, and full-enumeration approaches have been proposed in the literature for similar problem instances. We present a heuristic solution procedure based on simulated annealing. Computational results are reported. Copyright Springer Science+Business Media New York 2014

Keywords: Location analysis; Stackelberg-Cournot-Nash equilibrium; Game theory; Variational inequality; Simulated annealing (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s11067-013-9217-3

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