MARKET CAPTURE BY TWO COMPETITORS: THE PREEMPTIVE LOCATION PROBLEM*

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<jats:p><jats:bold>ABSTRACT. </jats:bold> We consider a location and allocation game for two competitor firms, A and B, that each seek to locate <jats:italic>p</jats:italic> facilities in a network. A market is captured by a particular firm if that market's closest facility belongs to that firm rather than a competitor. The question is as follows: Firm A wants to locate its <jats:italic>p</jats:italic> facilities so that B, which enters also with <jats:italic>p</jats:italic> facilities <jats:italic>after</jats:italic> Firm A has located its facilities, will capture the minimum market value possible. That is, Firm A wishes to preempt Firm B in its bid to capture market share to the maximum extent possible. A model is presented that addresses this issue, together with solution methods and computing times.</jats:p>

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