Cooperative game analysis of retail space-exchange problems |
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Authors: | Mingming Leng Mahmut Parlar Dengfeng Zhang |
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Affiliation: | 1. Department of Computing and Decision Sciences, Faculty of Business, Lingnan University, Hong Kong;2. DeGroote School of Business, McMaster University, Hamilton, Ontario L8S 4M4, Canada;3. PingAn Bank, No. 5047 East Shen Nan Road, Shenzhen, Guangdong 518001, China |
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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. |
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Keywords: | Retail space-exchange Bargaining power Generalized Nash bargaining scheme Weighted Shapley value |
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