Abstract

This paper deals with competitive location models ion a line. These models are essentially explanatory in nature, i.e., they demonstrate the effects different policies have and how competitors generally behave. Due to the simplicity of the market shape under consideration, it is clearly not designed to provide locating firms with solutions to their specific problems. While the assumption of symmetry among players is the assumption in a vast majority of the literature, it does not always apply. Firms do not apply the same technologies, so that their cost functions may differ. Upstarts may attempt to establish a foothold in the market (by maximizing sales, while keeping the profit at least at a preset required minimum level), while established firms may attempt to maximize their profit. Similarly, while some firms employ mill pricing as their pricing policy of choice, others, such as internet firms, may use delivered pricing instead. Asymmetries such as these are at the core of this paper.