Two vendors, Ms. Bud and Ms. Weiser, operate on a beach. They are required to charge the same price, but they can choose where to locate themselves on the beach. Their customers, sunbathers, do not like to be near each other, so they are spread evenly along the beach. Sunbathers are also averse to walking, so they purchase one can of beer from the vendor closest to them. If one vendor, say, Ms. Bud, had already chosen her location, where should her rival, Ms. Weiser, place herself? Who are the customers these two vendors are actually competing for? All the customers on the beach? The ones on their left/right? Only the ones between these two vendor locations?
Any business operates on a supply and demand mentality, how can they supply to the …show more content…
Here the both vender are centrally located, both charging the same price for the same product, essentially causing a stalemate. However, they have created a focal point for the beach and are attracting more customer closer to both their booths. This represents the best option for both venders to establish their locations, sharing the profits equally. Although, one could edge out the other by offering additional options or marketing their beer more effectively.
If one vendor, say, Ms. Bud, had already chosen her location, where should her rival, Ms. Weiser, place herself? This scenario challenges Ms. Weiser to out place her competitor, consider the disbursement of the beach goers and what location on the beach will offer the shortest route to her beer.
Again we see both stands collocated at the center of the beach. If Ms. Weiser choose to place her booth anywhere else on the beach she would be allowing Ms. Bud to control the traffic from an entire side and vie for any beach goers in the …show more content…
The Hotelling Style Model of Spatial Competition works to explain this drive by pointing out that with no difference in price customers will always travel to the shop nearest to their location (Eaton & Tweedle, 2010). If one seller is higher on the beach then the other she would control the larger market share, the only way for the other seller to remain competitive is to hold the center of the breach. This mentality of one upmanship is quantified by the Nash Equilibrium, a theory where each seller makes the best decision based off of the other seller’s actions (S.K., 2016). Essentially, working each other into a stalemate as they jostle for the upper hand, if one seller movers her cart, then the other seller will move until both carts equally share the available market. While this is not an optimal solution for the beach goers, it does create an interesting paradigm where competing business cluster together rather than being spread evenly throughout a
Any business operates on a supply and demand mentality, how can they supply to the …show more content…
Here the both vender are centrally located, both charging the same price for the same product, essentially causing a stalemate. However, they have created a focal point for the beach and are attracting more customer closer to both their booths. This represents the best option for both venders to establish their locations, sharing the profits equally. Although, one could edge out the other by offering additional options or marketing their beer more effectively.
If one vendor, say, Ms. Bud, had already chosen her location, where should her rival, Ms. Weiser, place herself? This scenario challenges Ms. Weiser to out place her competitor, consider the disbursement of the beach goers and what location on the beach will offer the shortest route to her beer.
Again we see both stands collocated at the center of the beach. If Ms. Weiser choose to place her booth anywhere else on the beach she would be allowing Ms. Bud to control the traffic from an entire side and vie for any beach goers in the …show more content…
The Hotelling Style Model of Spatial Competition works to explain this drive by pointing out that with no difference in price customers will always travel to the shop nearest to their location (Eaton & Tweedle, 2010). If one seller is higher on the beach then the other she would control the larger market share, the only way for the other seller to remain competitive is to hold the center of the breach. This mentality of one upmanship is quantified by the Nash Equilibrium, a theory where each seller makes the best decision based off of the other seller’s actions (S.K., 2016). Essentially, working each other into a stalemate as they jostle for the upper hand, if one seller movers her cart, then the other seller will move until both carts equally share the available market. While this is not an optimal solution for the beach goers, it does create an interesting paradigm where competing business cluster together rather than being spread evenly throughout a