Real World Math: Why do businesses that do the same thing appear next to each other?

Nov 4, 2020 | Eagan

You've probably seen in Apple Valley that there are two grocery stores right next to each other; Sam's Club and Fresh Thyme. Or you could have seen a food court in the Mall Of America with all the different restaurants bunched up together. But why? Why would all these places be next to each other? Wouldn't they get more space covered if they spread out?

The answer to this question is actually no. It may be confusing but it makes sense once you learn why. To learn this, we'll use two lemonade stands as an example. Let's start!

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As you see in this picture, there is just one stand in the middle of a 50-foot field. This stand belongs to a person called Joe. For now, he is the only lemonade stand in the area. This means that all the people in that area would have to come to him for lemonade.

Now, another person called Bob is going to come along. Bob has the exact same lemonade stand, from recipe to looks. This means that nobody has a preference and will just go to whoever is closer. So, Joe and Bob will keep an equal distance from each other as shown in the picture because they decide that that's fair.

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As you can see in the picture, I marked the area that Joe and Bob control. People in the red area will come to Joe's stand while people in the blue area come to Bob's stand. They both have an equal area for now and everything is fair. Things go wrong the next day though because Bob gets there early and takes the very center while Joe has to be right next to him. This leads to Joe having less area.

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So, what would the best outcome be then? If they both stay an equal space apart, one of them will just move to the middle to take more customers than the other. It looks like the best answer is what is shown in the picture below.

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As shown, they are both right next to each other in the middle. Here, they can never take customers away from each other and each get an equal amount of customers.

This is why we see businesses that do the same thing usually close together. Now, let's see what you have learned.

Vibha and Yashas both have their own ice cream stands on the beach. They are both in the center and right next to each other. Why is this? Answer with a video and send the video through Whatsapp.

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