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Translator: tom carter Reviewer: Bedirhan Cinar Why are gas stations always built right next to other gas stations? Why can I drive for a mile without finding a coffee shop and then stumble across three on the same corner? Why do grocery stores, auto repair shops and restaurants always seem to exist in groups instead of being spread evenly throughout a community? While there are several factors that might go into deciding where to place your business, clusters of similar companies can be explained by a very simple story called Hotellings Model of Spatial Competition. Imagine that you sell ice cream at the beach. Your beach is one mile long and you have no competition. Where would you place your cart in order to sell the most product? In the middle. The one-half-mile walk may be too far for some people at each end of the beach, but your cart serves as many people as possible. One day you show up at work just as your cousin Teddy is arriving at the beach with his own ice cream cart. In
