Localization of firms in conditions of triangular distribution of consumers and uncertain quality of firms

Document Type: Original Article


1 Urmia university, Urmia, Iran

2 Tehran PNU University, Tehran, Iran


One of the main problems of localization models is simplifying assumptions on consumers' distribution on the streets or city. Localization methods usually use uniform distribution patterns while in real world, this kind of distribution is unavailable and the consumers are mostly accumulated in centers rather than margins. Using triangular distribution for consumers and concerning uncertainty of the quality of products of enterprises, this paper deals with localization of enterprises. The results indicated that if the quality of products differs highly, then just one enterprise will sell its products in the market and if this difference is partial and negligible, then both enterprises will be active in the market. If either enterprise 1 or enterprise 2 is the only seller in the market, then it gets the highest price at final points. Furthermore, if the indifferent consumer is at the left side of center, then enterprise 1 will get the highest price at left margin (point 0) and if the indifferent consumer is at the right side of center, then enterprise 1 will get the highest price at right side (point 1) and in both conditions, enterprise 2 will get the highest price at center.


Bagherinejad. J., & Niknam, A. (2012). Comparative Analysis of Problems of Locating Competitive Facilities: Models and Practical Methods. First National Conference on Industrial Engineering and Systems, (pp. 2-5). Najaf Abad.

Chen, Y., & Riordan, H. M. (2007). Price and Variety in the Spokes Model. The Economic Journal , 117(522), 897-921.

Christou, Ch., & Vettas, N. (2005). Location choices under quality uncertainty. Mathematical Social Sciences, 50 (2005), 268– 278.

Darling, J. R. (2001). Successful competitive positioning: the key for entry into the European consumer market. European Business Review, 13 (4), 209-221.

Granot, D., Granot, F., & Raviv, T. (2010). On Competitive Sequential Location in a Network with a Decreasing Demand Intensity. European Journal of Operational Research, 205(2010), 301–312.

Kieron, J. M., Ernie, G., Teo, S., & Taojun, X. (2014). Socially-Optimal Locations of Duopoly Firms with Non-Uniform Consumer Densities. Theoretical Economics Letters, 4 (6), 431–445.

Hotelling, H. (1929). Stability in Competition. Economic Journal, 39 (1929), 41–57.

Hosun, Rhim., Teck, Ho., & Karmarkar, S, Uday (2003). Competitive Location Production and Market Selection. European Journal of Operational Research, 149 (1), 211–288.

Lijesen, M., & Reggiani, C. (2013). Location Choice in the Spoke Model. EARIE Conference 2013. Casa de São Tiago.


Lijesen, M., & Reggiani, C. (2016). Market Competition and Firms Specialization Choices. 56TH ERSA Congress 2016. Vienna.

Macoei, A., Serajiyan, A., & Sadat Torkestani, S. (2014). Review of the Literature Competitive Facility Location Using Game Theory. Research Journal of Engineering in Manufacturing Systems, 2(3), 1–19.

Melaniphy, J. (1999, 2 5). Food courts - the food operator's perspective. Retrieved 2003, from http://www.melaniphy.com/ARTIC3.htm.

Naveen, K. J., Kothari, T., & Kumar, V. (2016). Location Choice Research: Proposing New Agenda. Research Article, Management International Review, 56(3), 1-22.

Nicholas, E. (1989). Quality Variations and Maximal Variety Differentiation, Regional Science and Urban Economics, 19 (1989), 21-29

Shahbazi, K., & Salimian, S. (2017). Expansion of Location Theories of Firms and Products’ Consistency Using Triangular Distribution Approach. IRANIAN Economic Review, 21 (3), 497-518.

Shahbazi. K., & Salimian. S. (2018). Localization of firms in the Presence of Different Types of Consumers (experienced and inexperienced). Journal of Economic Research, 53(1), 45-67.

Shy, O. (1995). Industrial organization: theory and applications. Cambridge: MIT Press.

Vinay, S., & chakra, V. (2005). Industrial location and spatial in equilibrium Theory and Evidence from India, , 9(1), . review of Development Economics, 9(1), 47-65.