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Networks and Spatial Economics

, Volume 14, Issue 1, pp 117–132 | Cite as

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

  • Paul G. Berglund
  • Changhyun Kwon
Article

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.

Keywords

Location analysis Stackelberg-Cournot-Nash equilibrium Game theory Variational inequality Simulated annealing 

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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.3GtmsSheltonUSA
  2. 2.Department of Industrial and Systems EngineeringUniversity at BuffaloSUNY, BuffaloUSA

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