Cooperative approach to a plant location problem with positive externalities

A. Navarro Ramos, G. Bergantiños Cid

We consider that a firm is planning to open a new plant in certain country. This country is divided into different regions where the plant could be installed. On these regions are located a finite number of firms, which obtain some benefit from this new incorporation. We assume that a planner should decide where to locate the new plant maximizing the global benefit and providing a compensating scheme such that the incoming firm gets more than in the decentralized mechanism and the other firms are not worst off. In order to do this, we associate to any problem a utility transferable cooperative game, considering that cooperation on a region exists if and only if all firms already installed on that region belong to the coalition. We study the core of the game and propose two solutions belonging to the core. We also provide characterizations for these solutions.

Keywords: tu games core location characterization

M. Domènech Blàzquez, J. M. Giménez Pradales, M. A. Puente del Campo

C. M. Manuel García, D. Martín García