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Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

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Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#51

Post by catch23 »

nfriedly wrote: post #20
lionhearted wrote: post #11

Earlier quoted context omitted.

Huh, you're right, there is Java in there - I had no idea, it looked like simple image files. Couple questions for more savvy people - 1. Why would the author do that for static images? 2. Is there any way I can see that going forwards to warn people? I'm running Chrome/Win7, and didn't even notice. I looked up the source and there it is - But it really makes no sense why the author would do that - it's just a straig…

Perhaps it was an attempt to stop people from "stealing" his images.. or perhaps the author just doesn't know any better...

They're quite valuable images. I'm going to steal them for my myspace page.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#52

Post by jlees »

There's some discussion of this in Starbucked, i.e. why Starbucks stores open across the road from each other. Part of it is if people are already going to that location for coffee, having an extra Starbucks and shorter lines will incite them to go more often; the illusion of choice. I don't really recall the rest of the reasoning as it seemed somewhat spurious, but the fact quoted in the book, that when a Starbucks opens across from another they both do better business than the solo shop, is quite remarkable.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#53

Post by inerte »

hegemonicon wrote: post #47

I wonder if it's related to the following phenomena: An antique seller has a a shop downtown. A second antique shop next door, and his business drops. Then a third antique shop opens across the street, the neighboorhood becomes 'the antique district', and business booms for all three.

No. Two different conclusions. The only similarity is that at some point there were two vendors.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#54

Post by andylei »

joez wrote: post #43

Three men went off on a sailboat together, a physicist, a chemist, and an economist. Unfortunately they ran into a storm and the boat was wrecked on an uninhabited island. The only food they were able to rescue from the wreckage was a case of baked beans. As they got hungry, they began to wrestle with the problem of how to open the bean cans. The physicist said "I'll climb a tree and throw a can onto a rock and it'll…

>> One dangerous assumption in the hoteling model is that there are no costs to changing your position

location cost is not really necessary. think of this as a game that the ice cream sellers play before they locate. they figure, where do i place my hut to get the most business? it's at the center, no matter how many operators there are.

>> another unrealistic assumption: there are only two players

doesn't matter how many players there are. suppose there's one ice cream guy. where is he going to put his ice cream hut? in the center. let's say another one shows up. where is he going to put his hut? in the center. the logic repeats.

>> A third assumption is that it is a one dimensional world or that consumers judge choices only along one spectrum

yeah, this is a model for a perfectly competitive market. ice cream is a good example, as well as gas stations. this model is probably bad for products with lots of differentiation.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#55

Post by Luff »

davidw wrote: post #4
martian wrote: post #3

The application to politics is especially relevant: "Anthony Downs noted that Hoteling's model could explain political competition. ... As with the ice cream sellers on the beach the political candidates will choose a political position that is virtually the same as their opponent's. Furthermore the candidates will be driven to select the political position of the median voter." This jives with gut intuition, that in…

It depends on the voting system too, though. This doesn't happen so much in systems that are not "winner takes all". In Italy, you can happily vote for the hammer-and-sickle communists (or the extremists on the other end) and they'll pick up a few seats in parliament; it's not like their representatives need to win in any one district - it's enough to get a percentage of the national vote. This has both benefits and…

But to rule the country you need half of the votes, and no matter how many parties a country has, alliances form between them as to present themselves to the population as a viable alternative to the parties currently in power. People who dislike the current government do not want to throw their vote away on parties outside those two main alternatives - changing the alliance in power takes precedence.

We have 7 political parties represented in our parliament("riksdag"), but in effect you can only choose between two alliances who each has joint policies. Which have now become about the same by the process described in the article. So the choice we have is between the guys who want to lower the tax by 1-2%, or the ones who want to raise the tax by 1-2%. The rest of the difference is rhetoric.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#56

Post by omouse »

nailer wrote: post #5

Many browsers and OS combinators suffer problems when Java applets are automatically launched. Please add a [JAVA] tag in future.

Many browsers and OS combinators suffer problems when Flash objects are on a website.

Please add a [FLASH] tag in future.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#57

Post by euccastro »

andylei wrote: post #54
joez wrote: post #43

Three men went off on a sailboat together, a physicist, a chemist, and an economist. Unfortunately they ran into a storm and the boat was wrecked on an uninhabited island. The only food they were able to rescue from the wreckage was a case of baked beans. As they got hungry, they began to wrestle with the problem of how to open the bean cans. The physicist said "I'll climb a tree and throw a can onto a rock and it'll…

>> One dangerous assumption in the hoteling model is that there are no costs to changing your position location cost is not really necessary. think of this as a game that the ice cream sellers play before they locate. they figure, where do i place my hut to get the most business? it's at the center, no matter how many operators there are. >> another unrealistic assumption: there are only two players doesn't matter ho…

>>> doesn't matter how many players there are. suppose there's one ice cream guy. where is he going to put his ice cream hut? in the center. let's say another one shows up. where is he going to put his hut? in the center. the logic repeats.

No it doesn't. With three sellers in the center, the one in the middle is close to very little people. He's in the worst possible spot and he'd better move anywhere else. So that's no longer a stable layout.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#58

Post by joez »

andylei wrote: post #54
joez wrote: post #43

Three men went off on a sailboat together, a physicist, a chemist, and an economist. Unfortunately they ran into a storm and the boat was wrecked on an uninhabited island. The only food they were able to rescue from the wreckage was a case of baked beans. As they got hungry, they began to wrestle with the problem of how to open the bean cans. The physicist said "I'll climb a tree and throw a can onto a rock and it'll…

>> One dangerous assumption in the hoteling model is that there are no costs to changing your position location cost is not really necessary. think of this as a game that the ice cream sellers play before they locate. they figure, where do i place my hut to get the most business? it's at the center, no matter how many operators there are. >> another unrealistic assumption: there are only two players doesn't matter ho…

> doesn't matter how many players there are. suppose there's one ice cream guy. where is he going to put his ice cream hut? in the center. let's say another one shows up. where is he going to put his hut? in the center. the logic repeats.

That's not true. Let me explain. In this model (1 dimensional spectrum, be it distance or whatever), if a third player entered the market and the other two players are located at the center then the new players rational choice is to be on either side of the incumbents. He therefore sandwiched the middle player and stole all of his customers, the middle player will then move to the outside and again a player will have been sandwiched. The cycle repeats.

But if you add in costs associated with relocating (time or revenue lost or rebranding or moving costs) then this no longer is an effective strategy. A player might realize that this would happen and purposely not locate in the middle in order to avoid a fight. I don't quite remember the solution to a three player model but that was also based on an assumption that there are only three players.

It gets highly complicated when there is the possibility of new entrants. The lesson could be watch out for new entrants and stay nimble (so it is cheap for you to react when there are new entrants).

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#59

Post by davidw »

Luff wrote: post #55
davidw wrote: post #4

Earlier quoted context omitted.

It depends on the voting system too, though. This doesn't happen so much in systems that are not "winner takes all". In Italy, you can happily vote for the hammer-and-sickle communists (or the extremists on the other end) and they'll pick up a few seats in parliament; it's not like their representatives need to win in any one district - it's enough to get a percentage of the national vote. This has both benefits and…

But to rule the country you need half of the votes, and no matter how many parties a country has, alliances form between them as to present themselves to the population as a viable alternative to the parties currently in power. People who dislike the current government do not want to throw their vote away on parties outside those two main alternatives - changing the alliance in power takes precedence. We have 7 polit…

In Italy (but not just Italy), there are very real philosophical differences between the parties in the coalitions. On one side you still have real, unrepentant communists, on the other side, you have Alessandra Mussolini active in politics.

What often occurs is that the big center left/right party has, say, 45%, and needs a minor party (that polled, say, 6%) to push them over 50%. The minor party then gets to hold the bigger party hostage: we want this, this, and this or else there is no deal. This gives the minor party a share of power all out of proportion to their actual percentage of the vote.

Re: Why Ice Cream Sellers Stand Next to Each Other Instead of Spreading Out

#60

Post by billswift »

pavel_lishin wrote: post #2

But what happens when there are three ice-cream sellers?

I've been thinking about that. I don't know what the eventual distribution would look like, there doesn't appear to be a stable solution. But at the beginning, he should locate at a point one-third of the way from the center to an end - at that point 41% of the beach is closer to him than to either of the original competitors.
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