Why retail competitors tend to cluster geographically

[bigmoose]

In my marketing studies, I ran across this video today and learned why similar retail establishments tend to cluster together. This has amazed my intuitive engineering mind over the years, as I always wondered why two newly built autoparts stores built right next door to each other. Also why we have "auto mile" where 5 to 8 car lots cluster along the same roadway.

If these questions always stumped you, watch the following video and be amazed and educated!
[youtube]jILgxeNBK_8[/youtube]

 

[Nast]

Nice. You kind of grasp the essence of it intuitively, but that clearly spells it out. Nash Equilibrium!

 

[marty]

There was one restaurant on a street. They were not doing much business. 5 more restaurants opened on the same street right in the same area. Business increased in the first restaurant. That area became the place to go to get something to eat.