Plant Location Under Economies-of-Scale—Decentralization and Computation

Abstract

An exploration of the margin of error entailed in using a “one-point move” algorithm for solving a class of fixed-charge problems. The algorithm is of interest both from the viewpoint of numerical analysis and also from the analogy with market mechanisms. Despite the presence of economies-of-scale, there is the possibility of operating a decentralized system. This is a two-price system; it implies discriminatory and also marginal cost pricing.