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This always seemed to fall down for me in that some people who were willing to walk 1/4 mile for ice cream won't be willing to walk 1/2 mile. You have to make h

This always seemed to fall down for me in that some people who were willing to walk 1/4 mile for ice cream won't be willing to walk 1/2 mile. You have to make huge assumptions to call this any sort of "law".

gkop 8y ago
It was taught to me with gas stations as the example. Something people need.
setr 8y ago
I would imagine in the fridge example that results in a product category. In the ice cream example, the carts would move as far possible towards the middle until the incentive is no longer an incentive. They're already in the middle, or going any closer would lose rather than gain customers. But afaict the general idea still holds, theres an inherent incentive to move to the middle (which ofc can be defeated by competing incentives but nonetheless)
repsilat 8y ago
This is a great point even outside the metaphor -- voters will stay at home if neither candidate "speaks to them", and if the voter distribution is "lumpy", a third candidate angling to own the second-biggest "lump" can beat the two mainstream candidates fighting over the mainstream audience.
chatmasta 8y ago
Assuming those preferences are normally distributed across the beach, both vendors will evenly split the opportunity cost, on average. It’s certainly a reductionist metaphor, but it does seem to take this consideration into account. In fact, it’s kind of the point. The vendors split the opportunity cost, so they are at an equilibrium, but the beachgoers are not.
alangpierce 8y ago
I'd say it's a significant result because it's a situation where natural competition causes a negative outcome for everyone. Having to walk 1/2 mile for ice cream is certainly at least as bad of an experience as having to walk 1/4 mile, probably strictly worse for most people. It seems likely that both vendors will lose some customers compared with the original scenario, and that the average customer experience will be worse. If the same person ran both carts, or if they were run by the government, then they would be spaced far apart (the original position), which would be better for everyone.
- mmt 8y ago
  > which would be better for everyone. I agree that the spacing would be, overall, better, but that, by no means, guarantees that the monopoly would be better. We have plenty of historical evidence to the contrary. It's important to keep this particular economic "law" in perspective: it's a very specific, negative effect of competition. It doesn't mean that competition on the whole is undesirable.
- cbsmith 8y ago
  > I'd say it's a significant result because it's a situation where natural competition causes a negative outcome for everyone. Not everyone. It's a sweet deal for people in the middle.

gkop 8y ago

It was taught to me with gas stations as the example. Something people need.

setr 8y ago

I would imagine in the fridge example that results in a product category. In the ice cream example, the carts would move as far possible towards the middle until the incentive is no longer an incentive. They're already in the middle, or going any closer would lose rather than gain customers. But afaict the general idea still holds, theres an inherent incentive to move to the middle (which ofc can be defeated by competing incentives but nonetheless)

repsilat 8y ago

This is a great point even outside the metaphor -- voters will stay at home if neither candidate "speaks to them", and if the voter distribution is "lumpy", a third candidate angling to own the second-biggest "lump" can beat the two mainstream candidates fighting over the mainstream audience.

chatmasta 8y ago

Assuming those preferences are normally distributed across the beach, both vendors will evenly split the opportunity cost, on average. It’s certainly a reductionist metaphor, but it does seem to take this consideration into account. In fact, it’s kind of the point. The vendors split the opportunity cost, so they are at an equilibrium, but the beachgoers are not.

alangpierce 8y ago

I'd say it's a significant result because it's a situation where natural competition causes a negative outcome for everyone. Having to walk 1/2 mile for ice cream is certainly at least as bad of an experience as having to walk 1/4 mile, probably strictly worse for most people. It seems likely that both vendors will lose some customers compared with the original scenario, and that the average customer experience will be worse. If the same person ran both carts, or if they were run by the government, then they would be spaced far apart (the original position), which would be better for everyone.

mmt 8y ago
> which would be better for everyone. I agree that the spacing would be, overall, better, but that, by no means, guarantees that the monopoly would be better. We have plenty of historical evidence to the contrary. It's important to keep this particular economic "law" in perspective: it's a very specific, negative effect of competition. It doesn't mean that competition on the whole is undesirable.
cbsmith 8y ago
> I'd say it's a significant result because it's a situation where natural competition causes a negative outcome for everyone. Not everyone. It's a sweet deal for people in the middle.