Document Type

Journal article

Source Publication

European Journal of Operational Research

Publication Date

1-16-2014

Volume

232

Issue

2

First Page

393

Last Page

404

Keywords

Retail space-exchange; Bargaining power; Generalized Nash bargaining scheme; Weighted Shapley value

Abstract

We analyze retail space-exchange problems where two or more retailers exchange their excess retail spaces to improve the utilization of their space resource. We first investigate the two-retailer space exchange problem. In order to entice both retailers with different bargaining powers to exchange their spaces, we use the generalized Nash bargaining scheme to allocate the total profit surplus between the two retailers. Next, we consider the space-exchange problem involving three or more retailers, and construct a cooperative game in characteristic function form. We show that the game is essential and superadditive, and also prove that the core is non-empty. Moreover, in order to find a unique allocation scheme that ensures the stability of the grand coalition, we propose a new approach to compute a weighted Shapley value that satisfies the core conditions and also reflects retailers’ bargaining powers. Our analysis indicates that the space exchange by more retailers can result in a higher system-wide profit surplus and thus a higher allocation to each retailer under a fair scheme.

DOI

10.1016/j.ejor.2013.07.013

Print ISSN

03772217

E-ISSN

18726860

Publisher Statement

Copyright © 2014 Elsevier B.V. All rights reserved. Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

Leng, M., Parlar, M., & Zhang, D. (2014). Cooperative game analysis of retail space-exchange problems. European Journal of Operational Research, 232(2), 393-404. doi: 10.1016/j.ejor.2013.07.013