Regional competition for the location of new facilities
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A model of interregional competition for the location of new facilities is analyzed as a differential game. Two regions try to enhance their attraction by making concessions to a location decision maker in order to raise the probability that a new facility will be located in a specific region. The prospective benefits and costs of exerting influence are decisive for the final outcomes of the model. The open-loop (and feedback) Nash equilibrium solution is inefficient in comparison to the cooperative solution of joint benefit maximization of both regions.
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