LOCATION STRATEGIES BASED ON DISCRETE CHOICE MODELS: AN EMPIRICAL APPLICATION TO SUPERMARKET LOCATION

Abstract

In this paper we present a theoretic two-stage model for retailers location and consumers purchase decision. Retailers decision problem is formalized in terms of a zero-sum game, whose payoffs refers to retailers' market share and consumers decision problem is formalized in terms of a discrete choice model, based on random utilities. The theoretical models provide forecasting of equilibrium market shares and the locations to be chosen by retailers, in terms of the geographic distribution of the underlying location space (constituencies of the town), population distribution and characteristics (types) of the consumers.Hotelling, Industrial Organization, Choice Model