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Competitive Location with Random Utilities

Author

Listed:
  • André de Palma

    (Northwestern University, Evanston, Illinois 60208)

  • Victor Ginsburgh

    (Université Libre de Bruxelles, Brussels, Belgium)

  • Martine Labbé

    (Erasmus University Rotterdam, Rotterdam, The Netherlands)

  • Jacques-François Thisse

    (Université Catholique de Louvain, Louvain-la-Neuve, Belgium)

Abstract

This paper studies m firms competing on location over a finite subset of vertices of a graph, with the aim of attracting consumers located at some vertices of this graph. It is shown that firm i ( i = 1, ..., m ) wants to establish its m i facilities at the m i -median of the graph whose vertices are weighted by consumers' purchasing power provided that consumers' tastes are sufficiently dispersed in probabilistic terms among the different firms. Examples based on some standard network configurations illustrate the property.

Suggested Citation

  • André de Palma & Victor Ginsburgh & Martine Labbé & Jacques-François Thisse, 1989. "Competitive Location with Random Utilities," Transportation Science, INFORMS, vol. 23(4), pages 244-252, November.
    • Handle: RePEc:inm:ortrsc:v:23:y:1989:i:4:p:244-252
    DOI: 10.1287/trsc.23.4.244
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    Cited by:

    1. Drezner, Zvi & Eiselt, H.A., 2024. "Competitive location models: A review," European Journal of Operational Research, Elsevier, vol. 316(1), pages 5-18.
    2. Abdullah Dasci & Gilbert Laporte, 2005. "A Continuous Model for Multistore Competitive Location," Operations Research, INFORMS, vol. 53(2), pages 263-280, April.
    3. Marianov, Vladimir & Rí­os, Miguel & Icaza, Manuel José, 2008. "Facility location for market capture when users rank facilities by shorter travel and waiting times," European Journal of Operational Research, Elsevier, vol. 191(1), pages 32-44, November.
    4. Benati, Stefano & Hansen, Pierre, 2002. "The maximum capture problem with random utilities: Problem formulation and algorithms," European Journal of Operational Research, Elsevier, vol. 143(3), pages 518-530, December.
    5. H. A. Eiselt & Vladimir Marianov, 2020. "Stability of utility functions and apportionment rules in location models," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 28(3), pages 772-792, October.

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