Competitive location on networks under delivered pricing

This paper presents a model of competition between two profit-maximizing firms which produce and sell a single homogeneous product to customers located on a network. The firms compete through their decisions concerning plant location, production technology and delivered prices. The authors model this competitive situation as a two staged game. The present results include: (i) the existence of a Nash equilibrium in location, production technology and delivered prices for any network configuration; (ii) the explicit determination of the equilibrium price schedules and location-technology choices; and (iii) a Hakimi-type property stating that firms may limit themselves to the vertices of the network to find the equilibrium locations.