COMPETITIVE AND PREDATORY MULTI-PLANT LOCATION DECISIONS

The decision of one of two competitors on a line to open a new plant is analysed. Three levels of interdependence -or independence- between the already existing firm and the new plant are studied: complete independence, joint decision making with respect to the location of the new plant only and joint decision making with respect to both pricing and location of the second plant. The latter is shown to make the already existing firm not to open the new plant. On the contrary, if the intention of the already existing firm is to drive its rival out of the market, monopolising thereafter the line, the new plant is located on the same point on which the multiplant firm's rival is located.