Facultad de Ingeniería

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A fresh look at an old problem: saturation in the retail market and how it affects both retailers and consumers
(Indian Society for Education and Environment, 2019-05-28) Yanine, Fernando; Cordova, Felisa M.; Valenzuela, Lionel; Isla, Pablo
Objective: Traditional saturation analysis on competitive location decision science focuses on diminishing returns for incumbents and newcomers in a specific spatial location pertaining to commercial retail potential past a certain point of market saturation. Methods/Findings: This study looks at this problem but employs a different approach to the subject altogether, wherein saturation is no longer a variable affecting only retailers but one that affects both: the marginal utility of consumers and the revenue of retailers albeit differently. A new mathematical model is proposed based on selected papers, contributing new insight into an already widely discussed subject. Application: Analysis shows that it is important for competitive location decision-making to address saturation from both sides of the overall competitive location decision issue, not just from the retailers’ standpoint.