Non-cooperative games

Facility location (competitive game)

The competitive facility location game is a kind of competitive game in which service-providers select locations to place their facilities in order to maximize their profits. The game has the following components: * There are several consumers who need a certain service, e.g, electricity connection. * There are several producers that can supply this service, e.g, electricity companies. * Each producer can build its facility (e.g, a power station) in one of several locations. * For every pair of consumer (C) and location (L), there is a fixed cost of serving C from L (e.g, depending on the distance between the power station and the consumer's house). This cost is denoted Cost[C,L]. The game is a sequential game with three steps: 1. * Each producer selects a location for placing its facility. 2. * Each producer set a price for each user (price discrimination is allowed, since there is a different cost for serving different consumers). 3. * Each consumer selects a facility to connect to. * Each consumer has a certain private value for accepting the service. For each consumer-producer pair: * The gain of the consumer for connecting to the producer's facility is his value minus the price; * The gain of the producer is the price minus the cost of serving the consumer; * The social welfare of this pair is the sum of the gains, i.e, the consumer's value minus the service cost. (Wikipedia).

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Nash equilibrium | Price of stability | Potential game | Backward induction | Price of anarchy | Subgame perfect equilibrium | Facility location (cooperative game) | Sequential game