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Solving a Location Problem of a Stackelberg Firm Competing with Cournot-Nash Firms

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  • Paul Berglund
  • Changhyun Kwon

Abstract

We study a discrete facility location problem on a network, where the locating firm acts as the leader and other competitors as the followers in a Stackelberg-Cournot-Nash game. To maximize expected profits the locating firm must solve a mixed-integer problem with equilibrium constraints. Finding an optimal solution is hard for large problems, and full-enumeration approaches have been proposed in the literature for similar problem instances. We present a heuristic solution procedure based on simulated annealing. Computational results are reported. Copyright Springer Science+Business Media New York 2014

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  • Paul Berglund & Changhyun Kwon, 2014. "Solving a Location Problem of a Stackelberg Firm Competing with Cournot-Nash Firms," Networks and Spatial Economics, Springer, vol. 14(1), pages 117-132, March.
    • Handle: RePEc:kap:netspa:v:14:y:2014:i:1:p:117-132
    DOI: 10.1007/s11067-013-9217-3
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