Article ID: | iaor19961965 |
Country: | United Kingdom |
Volume: | 3 |
Issue: | 4 |
Start Page Number: | 239 |
End Page Number: | 253 |
Publication Date: | Dec 1995 |
Journal: | Location Science |
Authors: | Tobin Roger L., Friesz Terry L., Miller Tan |
Keywords: | competition |
When a firm locates a new plant, and begins producing and shipping product to markets, this typically stimulates reactions by other firms supplying those markets. This suggests that to truly make a profit maximizing location decision, a firm must anticipate the market’s reaction in the location decision-making process. This paper, reviews the development of a class of models designed to determine the profit maximizing location decision for a firm seeking to establish a manufacturing facility (or facilities) on a network characterized by either competitive or oligopolistic economic competition. One particular model from this class is presented, and the importance of anticipating the reaction to a location decision is illustrated through numerical examples of the model.