| Article ID: | iaor201110099 |
| Volume: | 48 |
| Issue: | 1 |
| Start Page Number: | 373 |
| End Page Number: | 385 |
| Publication Date: | Jan 2012 |
| Journal: | Transportation Research Part E |
| Authors: | Geunes Joseph, Konur Diner |
| Keywords: | game theory, programming: convex, combinatorial optimization, heuristics |
This paper studies a set of heterogenous competitive firms simultaneously locating facilities at a set of locations to serve a set of markets. Firms incur firm‐specific transportation, congestion, and location costs, and market price is linear and decreasing in the amount shipped to the market by all firms. First, firms’ market‐supply decisions for given facility locations are characterized using a variational inequality formulation. Then, firms’ location decisions are analyzed. A heuristic method is provided for finding equilibrium locations, and its computational efficiency is compared to a random search method.