Every Friday afternoon, my friend
and I grab smoothies from the corner on our way back from class as a way of
treating ourselves for making it through another week of classes. Fortunately
for us, there are two smoothie stores conveniently located right on the corner.
Looking back to the start of the semester, I was originally shocked to find out
that there was going to be both a Juice Laundry and a Corner Juice opening less
than 100 feet from each other right on the corner. As a dedicated smoothie consumer,
I was excited to have these new locations available to grab a healthy snack and
study, but I was also confused as to how these two stores with nearly homogenous
products could both thrive in such close quarters to each other.
Hotelling, in his article “Stability
in Competition” from The Economic Journal
writes that stores with similar products will move closer to each other in
order to reach the maximum number of consumers. Given the high traffic of the
corner and close proximity to college students looking for healthy options and
study locations, it makes sense that anywhere on the corner would be an ideal
location for a business. But do we really need two smoothie stores? Anytime I
have gone into Corner Juice or Juice laundry there has been a line of customers
waiting to be served, so it appears that they are both doing well. Although I
was confused by these competitors setting up shop so close together, I now
understand that they did this to easily reach the large number of students looking
for accessible healthy food and juice options, therefore maximizing their
consumer base.
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