Consumer Choice in Competitive Location Models: Formulation and Heuristics

Universitat Pompeu Fabra Economics WP No. 290

Posted: 18 Sep 1998

See all articles by Rosa Colomé

Rosa Colomé

Open University of Catalunya (UOC) (Open University of Catalonia) - Department of Economics and Business

Daniel Serra

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Abstract

A new direction of research in Competitive Location theory incorporates theories of Consumer Choice Behavior in its models. Following this direction, this paper studies the importance of consumer behavior with respect to distance or transportation costs in the optimality of locations obtained by traditional Competitive Location models. To do this, it considers different ways of defining a key parameter in the basic Maximum Capture model (MAXCAP). This parameter will reflect various ways of taking into account distance based on several Consumer Choice Behavior theories. The optimal locations and the deviation in demand captured when the optimal locations of the other models are used instead of the true ones, are computed for each model. A metaheuristic based on GRASP and Tabu search procedure is presented to solve all the models. Computational experience and an application to 55-node network are also presented.

JEL Classification: C61, L81, R12

Suggested Citation

Colomé Perales, Rosa and Serra, Daniel, Consumer Choice in Competitive Location Models: Formulation and Heuristics. Universitat Pompeu Fabra Economics WP No. 290, Available at SSRN: https://ssrn.com/abstract=128828

Rosa Colomé Perales

Open University of Catalunya (UOC) (Open University of Catalonia) - Department of Economics and Business ( email )

Avda. Tibidabo, 39-43
08035 Barcelona
Spain
34-3-2542132 (Phone)
34-3-4176495 (Fax)

Daniel Serra (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 16 66 (Phone)
(34) 93 542 17 46 (Fax)

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