Have Wheels, Will Travel. (...to the Median)

Though this post may not have to do strictly with Public Choice, it is a relevant example of Spatial Location Theory--the basis of the Median Voter Theorem. Our stimulating discussion of hotdog stand placement really got me thinking about whether or not real businesses can afford to move strategically towards each other in order to garner the most business. The largest costs of starting a business are typically the 'bricks and mortar' expenses that you incur to putting up a storefront, so it would be financially unwise to periodically move toward the median location with your competitors. The only way you can exercise the Spatial Location Theory would be in the initial placement of your business or in the placement of your next branch or franchise, right?? Not if your business is based on wheels...

     

Apparently the three big car dealers of Charlottesville understand this theory and have put together "Car Wars" as a joint event to sell inventory and compete for business. This is only a short term event and not a final equilibrium, but it is probably the closest that any major business can get to shifting locations to the median. After some searching on google maps, it turns out that JPJ is actually located more or less equidistant from all three dealers. JPJ is 4.8 miles from Pantops (where Battlefield and Brown have locations) and 4.5 miles from the north end of Seminole Trail (where Brown and Jim Price have locations). Coincidentally, JPJ is also one of the few places in Charlottesville that can handle the inventory capacity of these three dealers. There are definitely many advantages of having a joint event--sharing costs of advertising, location rental, and converging on prices/rates--but the long term goal is to garner repeat business from those customers who are geographically on the other side of town, who would probably under normal circumstances go to one of the dealers closer to home So, if a dealer can somehow make their business/cars more attractive at this joint event, then they don't have to permanently move to a median location to steal long term business from the other dealers! It's actually quite a genius plan and a great advantage of having a mobile product.

This is a slight deviation on the theorem because these dealers do not have strictly identical products, but from a buyer's perspective there probably isn't a substantial difference between a Chevy, Ford, and Toyota.