Sharif Digital Repository

In this paper we consider the problem of joint location and pricing optimization for a firm in a heterogeneous market producing a single product. We assume that customers have a different willingness to pay for the product. We consider two classes of customers who are not uniformly distributed in the market and develop an analytical framework to determine the relationship between the optimal price and location of the firm. We demonstrate that the optimal price and location are closely related to each other, and thus there is a need for simultaneous optimization of the price and location. We provide both analytical and numerical results to illustrate the impact of transportation cost and the...