Abstract

This paper extends the follower's retail store location problem of Marianov et al. (2018) to include the leader's decisions. The leader locates its stores knowing that a follower will enter the market later offering a different product. Both maximize their markets given that customers can purchase none, one or two non-essential products on the same trip. The paper determines the best locations for a first and a second entrants through exact and approximated procedures. It turns out that, by locating with foresight, a first entrant can increase the total business in an area for himself and subsequent entrants. We solve the binary programming bi-level resulting problem for small instances by adapting an ad-hoc procedure. Furthermore, a new bi-level reactive GRASP procedure finds solutions for instances of up to 100 nodes in under 3,600 s of CPU time.