Competitive location on networks when the customer behaviour is threshold-sensitive

Abstract

We study a competitive multifacility location problem on networks where demand is inelastic and the customer choice rule is threshold sensitive. This means that the buying power of a customer is captured by rm A exclusively only if the distance from this customer to the competitor rms exceeds the distance to rm A in an amount greater than or equal to a threshold. This customer behaviour model may be considered an alternative to the binary and proportional choice rules. Some discretization results are proved and solution approachs are proposed.