EQUITY MAXIMIZING FACILITY LOCATION SCHEMES

In this paper, we address the equity question using taxes (in the case of a central authority) or side payments (in the case of cooperating authorities) to redress benefit inequities. We show that the usual distance minimizing facility location formulations are still optimal, providing a very simple tax or side payment scheme is used to equalize benefits for all customers in the system. In the event that taxes or side payments cannot be utilized, our analysis leads to a natural method for locating facilities to minimize inequities. For the case of a single facility, the complexity of our approach is O(n4), where n is the number of customer demand points (nodes) in the service network.