An efficient algorithm for arbitrary reverse furthest neighbor queries
APWeb'12 Proceedings of the 14th Asia-Pacific international conference on Web Technologies and Applications
Min-Max payoffs in a two-player location game
Operations Research Letters
Expert Systems with Applications: An International Journal
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This paper presents a simple model to determine the location strategies of two retail firms planning to open a number of stores in a geographical market. Firms try to maximize their profit under a leader-follower type competition in which the number of stores is made endogenous by the introduction of fixed costs. A novel methodology is developed in which firms' strategies are defined in terms of their location densities. This methodology leads to a model that is solvable analytically, and to several results on competitive location strategies. First, it is shown that if the follower decides to enter a market, he enters at least as strongly as the leader. Second, the leader can effectively deter entry even if she is severely cost-disadvantaged. However, in some cases the leader is better off by allowing the follower to enter the market. Third, the leader may also let the follower enter the market in some situations where she has a cost advantage. It is also shown that in situations where both firms enter the market, their location strategies are quite insensitive to model parameters.