Hotelling's Law

Hotelling's Law describes a situation in competitive markets where businesses tend to position themselves close to one another to attract the most customers. Picture two ice cream vendors on a beach: if one sets up on the left and another on the right, they both risk losing customers in the middle. To maximize their sales, both will often move closer together, creating a cluster. This phenomenon happens because consumers prefer convenience, leading to similar businesses gathering in high-traffic areas to increase their visibility and sales, even if it means sacrificing variety.