Surviving in a competitive spatial market: The threshold capture model

Daniel Serra (), Charles Revelle and Ken Rosing

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Most facility location decision models ignore the fact that for a facility to survive it needs a minimum demand level to cover costs. In this paper we present a decision model for a firm that wishes to enter a spatial market where there are several competitors already located. This market is such that for each outlet there is a demand threshold level that has to be achieved in order to survive. The firm wishes to know where to locate its outlets so as to maximize its market share taking into account the threshold level. It may happen that due to this new entrance, some competitors will not be able to meet the threshold and therefore will disappear. A formulation is presented together with a heuristic solution method and computational experience.

Keywords: Discrete facility location; threshold; competitive location (search for similar items in EconPapers)
JEL-codes: C61 R12 R53 (search for similar items in EconPapers)
Date: 1999-02
New Economics Papers: this item is included in nep-cmp and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:359

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