Robust equilibria in location games

B. Buechel, N. Roehl, European Journal of Operational Research 240 (2014) 505.

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Abstract
In the framework of spatial competition, two or more players strategically choose a location in order to attract consumers. It is assumed standardly that consumers with the same favorite location fully agree on the ranking of all possible locations. To investigate the necessity of this questionable and restrictive assumption, we model heterogeneity in consumers’ distance perceptions by individual edge lengths of a given graph. A profile of location choices is called a ‘‘robust equilibrium’’ if it is a Nash equilibrium in several games which differ only by the consumers’ perceptions of distances. For a finite number of players and any distribution of consumers, we provide a complete characterization of robust equilibria and derive structural conditions for their existence. Furthermore, we discuss whether the classical obser- vations of minimal differentiation and inefficiency are robust phenomena. Thereby, we find strong sup- port for an old conjecture that in equilibrium firms form local clusters.
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Journal Title
European Journal of Operational Research
Volume
240
Issue
2
Page
505-517
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Buechel B, Roehl N. Robust equilibria in location games. European Journal of Operational Research. 2014;240(2):505-517. doi:10.1016/j.ejor.2014.07.019.
Buechel, B., & Roehl, N. (2014). Robust equilibria in location games. European Journal of Operational Research, 240(2), 505–517. http://doi.org/10.1016/j.ejor.2014.07.019
@article{Buechel_Roehl_2014, title={Robust equilibria in location games}, volume={240}, DOI={10.1016/j.ejor.2014.07.019}, number={2}, journal={European Journal of Operational Research}, publisher={Elsevier}, author={Buechel, Berno and Roehl, Nils}, year={2014}, pages={505–517}}
Buechel, Berno, and Nils Roehl. “Robust Equilibria in Location Games.” European Journal of Operational Research 240, no. 2 (2014): 505–17. doi:10.1016/j.ejor.2014.07.019.
B. Buechel and N. Roehl, “Robust equilibria in location games,” European Journal of Operational Research, vol. 240, no. 2, pp. 505–517, 2014.
Buechel, Berno, and Nils Roehl. “Robust Equilibria in Location Games.” European Journal of Operational Research 240.2 (2014): 505–517. Web.
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