Location Models for Ceding Market Share and Shrinking Services

Abstract

New location models are presented here for exploring the reduction of facilities in a region. The first of these models considers firms ceding market share to competitors under situations of financial exigency. The goal of this model is to cede the least market share, i.e., retain as much of the customer base as possible while shedding costly outlets. The second model considers a firm essentially without competition that must shrink it services for economic reasons. This firm is assumed to close outlets so that the degradation of service is limited. An example is offered within a competitive environment to demonstrate the usefulness of this modeling approach.

Keywords: De-location, shrinkage, covering models

JEL Classification: C61, J80