On a branch-and-bound approach for a Huff-like Stackelberg location problem

Modelling the location decision of two competing firms that intend to build a new facility in a planar market can be done by a Huff-like Stackelberg location problem. In a Huff-like model, the market share captured by a firm is given by a gravity model determined by distance calculations to facilities. In a Stackelberg model, the leader is the firm that locates first and takes into account the actions of the competing chain (follower) locating a new facility after the leader. The follower problem is known to be a hard global optimisation problem. The leader problem is even harder, since the leader has to decide on location given the optimal action of the follower. So far, in literature only heuristic approaches have been tested to solve the leader problem. Our research question is to solve the leader problem rigorously in the sense of having a guarantee on the reached accuracy. To answer this question, we develop a branch-and-bound approach. Essentially, the bounding is based on the zero sum concept: what is gain for one chain is loss for the other. We also discuss several ways of creating bounds for the underlying (follower) sub-problems, and show their performance for numerical cases

Intergenerational Mobility and Macroeconomic History Dependence

That historical inequality can affect long run macroeconomic performance has been argued by a large literature on ‘endogenous inequality’ using models of indivisibilities in occupational choice, in the presence of borrowing constraints. These models are characterized by a continuum of steady states, and absence of mobility in any steady state. We augment such a model with heterogeneity in agents’ abilities in order to generate occupational mobility in steady state. Steady states with mobility are shown to be generically locally unique and finite in number. We provide forms of heterogeneity for which steady state is globally unique, and others where they are non-unique. Agent heterogeneity may also cause competitive equilibrium dynamics to fail to converge, but convergence can be restored in the presence of sufficient ‘inertia’ or occupation switching costs.Intergenerational mobility, occupational choice, human capital, borrowing constraints, inequality, history-dependence

Stabilizing Competitive Cycles with Distortionary Taxation

We utilize a simple overlapping generations model with a balanced budget rule to study the effect of distortionary taxation on cycles and local stability of equilibria. We show that under proportional taxation there is a critical tax rate above which cycles will vanish, while in the case of linearly progressive taxation there is a critical level of exemption below which cycles will vanish as well. Hence, a sufficiently high tax rate and a low tax progression eliminate cycles. If the lifetime utility function is quasi-linear, increasing the tax rate can cause the economy to become locally unstable both with proportional and linearly progressive taxation so that tax exemption does not matter. Finally, if the lifetime utility function is not quasi-linear, for small tax rates an increase in progression can locally destabilize the economy.overlapping generations, cycles, stabilizing taxation

Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl

The long-term trends of urbanization suggest: not only have more cities formed, but the leading metropolises have grown larger, with a number of peripheral subcenters developing over time. Conventional models of urban growth are limited, in that commuting cost and congestion eventually result in decreasing returns in a monocentric city as population becomes very large. We construct a general-equilibrium model with dynamic interactions between spatial agglomeration and urban development, driven by location-dependent knowledge spillovers. Our contribution allows endogenous development of subcenters to capture benefits from knowledge spillovers and offset diminishing returns from urban congestion, thus permitting more sustained city growth.Core-Periphery Urban Structure; Agglomerative Production Activity; Endogenous Formation of Cities

Re-conceptualising strategy in design management education

The aim of this paper is to explain the current place of ‘strategy’ in design management education in the UK. The research questions concern the extent to which design management education meets the needs of future strategic roles in management and secondly the ways in which design management education is keeping abreast with current theory and practice of management strategy. The paper draws on research from a UK research council project, The Metamorphosis of Design Management Network (MDMN).The methodology uses a qualitative approach to analyse the transcripts and activities undertaken in symposia over a five year period from 2007-2012, with a focus on four events held from 2010-12. The findings on education and strategic designer development were matched against the content analysis of strategy in conference papers presented at British Academy of Management from 2009-13. The findings demonstrate the exposure of students to organisations and different design contexts. However other strategic management developments in strategy-as-practice, dynamic capabilities and scenario building provide new opportunities to extend design management education. The conclusion summarises the opportunities for design education and the development of students as strategic designers through new interdisciplinary approaches

Urban Growth and Subcenter Formation: A Trolley Ride from the Staples Center to Disneyland and the Rose Bowl

There have been long-term trends of urbanization and sustained growth across developed and developing countries over the past two centuries. Not only have more cities formed, but the leading metropolises have grown larger, with a number of peripheral subcenters developing over time. Conventional models of urban growth are limited, in that commuting cost and congestion eventually result in decreasing returns in a monocentric city as population becomes very large. In our paper, we construct an endogenous growth model with dynamic interactions between spatial agglomeration and urban development. In contrast with the conventional endogenous urban growth framework, our paper models explicitly the underlying growth-driven mechanism, namely location- dependent knowledge spillovers. Our contribution allows endogenous development of subcenters to offset diminishing returns from urban congestion, thus permitting sustained city growth.Core-Periphery Urban Structure, Agglomerative Production Activity, Endogenous Formation of Cities

Bilevel models on the competitive facility location problem

Facility location and allocation problems have been a major area of research for decades, which has led to a vast and still growing literature. Although there are many variants of these problems, there exist two common features: finding the best locations for one or more facilities and allocating demand points to these facilities. A considerable number of studies assume a monopolistic viewpoint and formulate a mathematical model to optimize an objective function of a single decision maker. In contrast, competitive facility location (CFL) problem is based on the premise that there exist competition in the market among different firms. When one of the competing firms acts as the leader and the other firm, called the follower, reacts to the decision of the leader, a sequential-entry CFL problem is obtained, which gives rise to a Stackelberg type of game between two players. A successful and widely applied framework to formulate this type of CFL problems is bilevel programming (BP). In this chapter, the literature on BP models for CFL problems is reviewed, existing works are categorized with respect to defined criteria, and information is provided for each work.WOS:000418225000002Scopus - Affiliation ID: 60105072Book Citation Index- Science - Book Citation Index- Social Sciences and HumanitiesArticle; Book ChapterOcak2017YÖK - 2016-1

Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability

The existing literature on the stabilizing properties of interest-rate feedback rules has stressed the perils of linking interest rates to forecasts of future inflation. Such rules have been found to give rise to aggregate fluctuations due to self-fulfilling expectations. In response to this concern literature has focused on the stabilizing properties of interest-rate rules whereby the central bank responds to a measure of past inflation. The consensus view that has emerged is that backward-looking rules contribute to protecting the economy from embarking on expectations-driven fluctuations. A common characteristic of the existing studies that arrive at this conclusion is their focus on local analysis. The contribution of this paper is to conduct a more global analysis. We find that backward-looking interest-rate feedback rules do not guarantee uniqueness of equilibrium. We present examples in which for plausible parameterizations attracting equilibrium cycles exist. The paper also contributes to the quest for policy rules that guarantee macroeconomic stability globally. Our analysis indicates that policy rules whereby the interest rate is set as a function of the past interest rate and current inflation are likely to ensure global stability provided that the coefficient on lagged interest rates is greater than unity.