Have you ever been hungry while traveling during a speeding highway and you discover no restaurants nearby.
But suddenly you discover 4 or 5 restaurants all at one place and obtain confused where to travel .
Else have you ever wondered why can’t they locate the restaurants every 1km.
The answer is , they just follow
To make you better understand , let me plot this with an easy beach side Pani Poori shop story…
A Guy named Krishna decided to open a Pani Poori shop at beach.
Now, let us assume the length of the beach to be 1 km.
Krishna placed his shop right at the centre of the beach.
His shop had an honest reception from the people and therefore the number of consumers increased day by day.
Meanwhile at some point his friend Mohan from his village called up and expressed his idea in starting a Pani Poori shop, an equivalent like him.
Krishna accepted it and made a affect Mohan. And they decided to split the beach into two halves and located their shop as per the deal.
Both Krishna and Mohan had a equal number of consumers .
This state is called Socially optimal solution.
At this state, the purchasers needn’t be traveling much to urge what they desire. But this is not a steady state.
One fine day, Mohan decided to ascertain good profit and broke the deal by shifting his shop to the centre of the beach.
Mohan made good profit that day. Even a number of the purchasers of ram are driven towards Krishna’s shop. He was happy with that and shifted his shop back to the original.
This made Krishna angry and he decided to show Mohan a lesson. The next day, Krishna shifted his shop to the centre of the beach.
And result the same. Krishna made good profit that day.
This made Mohan angry and he shifted his shop right next to Krishna’s shop.
And he made profit.
The next day saw Krishna shifted his shop right next to Mohan’s to form profit.
This process went on for many days. And at one stage both Krishna and Mohan reached the centre of the Beach.
Now at this stage, whoever shifts their shop will find yourself losing.
This state of equilibrium is named as Nash equilibrium .
At this state, the purchasers got to be traveling much to urge what they desire.
As I already mentioned, the same can be applied to restaurants in a highway. Also to all or any petrol bunks, inns, coffee shops, even hospitals.
“It are going to be better to stay our competitors nearer to us”
That’s the moral.