Stability of utility functions and apportionment rules in location models

Abstract

This paper investigates how demand is apportioned to facilities by customers, given that they apply one of a number of utility functions according to which they satisfy their demand at the facilities. After delineating the basic decision-making process, a number of reasonable assumptions are formulated regarding the behavior of the utility functions after a scaling of their different parameters. The individual apportionment rules are examined so as to whether or not they satisfy these assumptions. The results are of importance for decision-makers that must use these utility functions when facing locational decisions.