A CONTINUOUS EQUILIBRIUM MODEL FOR ESTIMATING MARKET AREAS OF COMPETITIVE FACILITIES WITH ELASTIC DEMAND AND MARKET EXTERNALITY

This paper considers a heterogeneous 2-dimensional space where a given set of competitive facilities is located. Customers are assumed to be scattered continuously over the space, and each is also assumed to choose a facility to minimize individual total cost of receiving service. The total cost consists of both the congested travel time to the facility and a cost associated with the congestion externality at the facility. In addition, customer demand at any location is assumed to be a function of the total cost of receiving service. Given these assumptions, it is of interest to estimate the market areas and shares captured by each competitive facility. This problem is formulated here as a calculus of variations problem, and its optimality conditions are shown to be equivalent to the spatial customer choice equilibrium conditions with elastic demand and market externality. The model is solved by an efficient finite element method and illustrated with a numerical example.

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  • Corporate Authors:

    Institute for Operations Research and the Management Sciences (INFORMS)

    901 Elkridge Landing Road, Suite 400
    Linthicum, MD  United States  21090-2909
  • Authors:
    • Yang, Huajie
    • Wong, S C
  • Publication Date: 2000-5

Language

  • English

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Filing Info

  • Accession Number: 00794474
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jun 7 2000 12:00AM