Methods for computing Nash equilibria of a location quantity game, Submitted to Operations Research

M.E. Sáiz Pérez, E.M.T. Hendrix

Research output: Book/ReportReportAcademic

Abstract

A two stage model is described where firms take decisions on where to locate their facility and on how much to supply to which market. In such models in literature, typically the market price reacts linearly on supply. Often two competing suppliers are assumed or several that are homogeneous, i.e. their cost structure is assumed to be identical. The focus of this paper is on developing methods to compute equilibria of the model where more than two suppliers are competing that each have their own cost structure, i.e. they are heterogeneous. Analytical results are presented with respect to optimality conditions for the Nash equilibria in the two stages. Based on these analytical results, algorithms are developed to find equilibria. Numerical cases are used to illustrate the results and the viability of the algorithms. The method finds an improvement of a result reported in literature.
Original languageEnglish
Place of PublicationWageningen
PublisherMansholt Graduate School
Number of pages26
Publication statusPublished - 2006

Publication series

NameWorking paper / Mansholt Graduate School : Discussion paper
PublisherMansholt Graduate School

Keywords

  • operations research
  • firms
  • decision making
  • optimization
  • algorithms
  • location theory
  • markets
  • costs
  • equilibrium
  • equilibrium theory

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