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Environmentally friendly facility location with market competition

Author

Listed:
  • B Ghaddar

    (University of Waterloo, Waterloo, ON, Canada)

  • J Naoum-Sawaya

    (University of Waterloo, Waterloo, ON, Canada)

Abstract

Many traditional facility location models assume spatial monopoly where market competition is ignored. Since facility locations affect the firm’s market exposure and subsequently its profit, accounting for the impact of the location decisions on customers while anticipating the reaction of competitor firms is essential. In this paper, we introduce a competitive facility location problem where market prices and production costs are determined through the economic equilibrium while explicitly considering competition from other firms. In order to accommodate for the growing efforts on limiting carbon emissions, the presented model includes constraints on the amount of carbon emissions that are due to transportation, while allowing carbon trading. The problem is formulated as a mixed integer non-linear model. Through numerical examples, we illustrate the effect of market competition on the location decisions and discuss the impact of emission limits and carbon trading on customers.

Suggested Citation

  • B Ghaddar & J Naoum-Sawaya, 2012. "Environmentally friendly facility location with market competition," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 63(7), pages 899-908, July.
    • Handle: RePEc:pal:jorsoc:v:63:y:2012:i:7:p:899-908
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    Cited by:

    1. Liu, Weiwei & Kong, Nan & Wang, Mingzheng & Zhang, Lingling, 2021. "Sustainable multi-commodity capacitated facility location problem with complementarity demand functions," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).
    2. Conrado V. Plaza & Vanessa de A. Guimarães & Glaydston Ribeiro & Laura Bahiense, 2020. "Economic and environmental location of logistics integration centers: the Brazilian soybean transportation case," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 28(3), pages 749-771, October.

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