Competitive location and pricing on networks

In this paper we consider a location and pricing model for a retail firm that wants to enter a spatial market where a competitor firm is already operating as a monopoly with several outlets. The entering firms seeks to determine the optimal uniform mill price and its servers' locations that maximizes profits given the reaction in price of the competitor firm to its entrance. A tabu search procedure is presentedto solve the model together with computational experience.

Do agglomeration economies reduce the sensitivity of firm location to tax differentials?

Low corporate taxes can help attract new firms. This is the main mechanism underpinning the standard 'race-to-the-bottom'view of tax competition. A recent theoretical literature has qualified this view by formalizing the argument that agglomeration forces can reduce firms' sensitivity to tax differentials across locations. We test this proposition using data on firm startups across Swiss municipalities. We find that, on average, high corporate income taxes do deter new firms, but that this relationship is significantly weaker in the most spatially concentrated sectors. Location choices of firms in sectors with an agglomeration intensity at the twentieth percentile of the sample distribution are estimated to be twice as responsive to a given difference in local corporate tax burdens as firms in sectors with an agglomeration intensity at the eightieth percentile. Hence, our analysis confirms the theoretical prediction: agglomeration economies can neutralize the impact of tax differentials on firms' location choices.

On optimal location with treshold requirements

The optimal location of services is one of the most important factors that affects service quality in terms of consumer access. On theother hand, services in general need to have a minimum catchment area so as to be efficient. In this paper a model is presented that locates the maximum number of services that can coexist in a given region without having losses, taking into account that they need a minimum catchment area to exist. The objective is to minimize average distance to the population. The formulation presented belongs to the class of discrete P--median--like models. A tabu heuristic method is presented to solve the problem. Finally, the model is applied to the location of pharmacies in a rural region of Spain.

Location of hubs in a competitive environment

We offer a formulation that locates hubs on a network in a competitiveenvironment; that is, customer capture is sought, which happenswhenever the location of a new hub results in a reduction of thecurrent cost (time, distance) needed by the traffic that goes from thespecified origin to the specified destination.The formulation presented here reduces the number of variables andconstraints as compared to existing covering models. This model issuited for both air passenger and cargo transportation.In this model, each origin-destination flow can go through either oneor two hubs, and each demand point can be assigned to more than a hub,depending on the different destinations of its traffic. Links(``spokes'' have no capacity limit. Computational experience is provided.

Econometrics and decision making: Effects of presentation mode

Much of empirical economics involves regression analysis. However, does thepresentation of results affect economists ability to make inferences for decision makingpurposes? In a survey, 257 academic economists were asked to make probabilisticinferences on the basis of the outputs of a regression analysis presented in a standardformat. Questions concerned the distribution of the dependent variable conditional onknown values of the independent variable. However, many respondents underestimateduncertainty by failing to take into account the standard deviation of the estimatedresiduals. The addition of graphs did not substantially improve inferences. On the otherhand, when only graphs were provided (i.e., with no statistics), respondents weresubstantially more accurate. We discuss implications for improving practice in reportingresults of regression analyses.

Locating emergency services with different priorities: The priority queuing covering location problem

Previous covering models for emergency service consider all the calls to be of the sameimportance and impose the same waiting time constraints independently of the service's priority.This type of constraint is clearly inappropriate in many contexts. For example, in urban medicalemergency services, calls that involve danger to human life deserve higher priority over calls formore routine incidents. A realistic model in such a context should allow prioritizing the calls forservice.In this paper a covering model which considers different priority levels is formulated andsolved. The model heritages its formulation from previous research on Maximum CoverageModels and incorporates results from Queuing Theory, in particular Priority Queuing. Theadditional complexity incorporated in the model justifies the use of a heuristic procedure.

Probabilistic maximal covering location-allocation models with constrained waiting time or queue length for congested systems

When dealing with the design of service networks, such as healthand EMS services, banking or distributed ticket selling services, thelocation of service centers has a strong influence on the congestion ateach of them, and consequently, on the quality of service. In this paper,several models are presented to consider service congestion. The firstmodel addresses the issue of the location of the least number of single--servercenters such that all the population is served within a standard distance,and nobody stands in line for a time longer than a given time--limit, or withmore than a predetermined number of other clients. We then formulateseveral maximal coverage models, with one or more servers per service center.A new heuristic is developed to solve the models and tested in a 30--nodesnetwork.

Location models in the public sector

The past four decades have witnessed an explosive growth in the field of networkbased facilitylocation modeling. This is not at all surprising since location policy is one of the mostprofitable areas of applied systems analysis in regional science and ample theoretical andapplied challenges are offered. Location-allocation models seek the location of facilitiesand/or services (e.g., schools, hospitals, and warehouses) so as to optimize one or severalobjectives generally related to the efficiency of the system or to the allocation of resources.This paper concerns the location of facilities or services in discrete space or networks, thatare related to the public sector, such as emergency services (ambulances, fire stations, andpolice units), school systems and postal facilities. The paper is structured as follows: first,we will focus on public facility location models that use some type of coverage criterion,with special emphasis in emergency services. The second section will examine models based onthe P-Median problem and some of the issues faced by planners when implementing thisformulation in real world locational decisions. Finally, the last section will examine newtrends in public sector facility location modeling.

Contractual allocation of decision rights and incentives: The case of automobile distribution

We analyze empirically the allocation of rights and monetary incentives in automobile franchise contracts. These contracts substantially restrict the decision rights of dealers and grant manufacturers extensive contractual completion and enforcement powers, converting the manufacturers, de facto, in a sort of quasi-judiciary instance. Variation in the allocation of decision rights andincentive intensity is explained by the incidence of moral hazard in the relation. In particular, when the cost of dealer moral hazard is higher and the risk of manufactureropportunism is lower, manufacturers enjoy more discretion in determining the performance required from their dealers and in using mechanisms such as monitoring, termination and monetary incentives to ensure such performance is provided. We also explore the existence of interdependencies between the different elements of the system. and find some complementarities between completion and termination rights, and between monitoring rights and the intensity of incentives.

Multi-period vendor managed inventory systems

In this paper we develop two models for an inventory system in which the distributormanages the inventory at the retailers location. These type of systems correspondto the Vendor Managed Inventory (VMI) systems described ib the literature. Thesesystems are very common in many different types of industries, such as retailingand manufacturing, although assuming different characteristics.The objective of our model is to minimize total inventory cost for the distributorin a multi-period multi-retailer setting. The inventory system includes holdingand stock-out costs and we study the case whre an additional fixed setup cost ischarged per delivery.We construct a numerical experiment to analyze the model bahavior and observe theimpact of the characteristics of the model on the solutions.