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Why do competitors open their stores next to one another? - Jac de Haan

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View full lesson on ed.ted.com - http://ed.ted.com/lessons/why-do-competitors-open-their-stores-next-to-one-another-jac-de-haan Why are all the gas stations, cafes and restaurants in one crowded spot? As two competitive cousins vie for ice-cream-selling domination on one small beach, discover how game theory and the Nash Equilibrium inform these retail hotspots. Lesson by Jac de Haan, animation by Luke Rowsell.
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Text Comments (2534)
YuHsuan Cheng (4 days ago)
Some research have shown already, hotellings equilibrium only exists when there is only two shops........
Mithilesh Kuncham (7 days ago)
Teddy is an a-hole
TundraWolf Prod (11 days ago)
Always love watching old ones
3:40 more than ONE DIRECTION😍🔥😂
John (22 days ago)
B/c it's easier for Customers if they only have to make a single stop at a general location. It IS, like Stealing tho. Cooperation is Better than Competition.
Victor Tenev (23 days ago)
Extremely helpful, thank you!
Bruce Bega (28 days ago)
this is like an intro to an intro at most....
Nishikata Sitohang (29 days ago)
So that's why indomaret and alfamart always opened side by side
Zubair Bahir (1 month ago)
Satisfying customers may come from a long distance to shop from an outlet with competitive prices.
JD's Progress (1 month ago)
Keep your customers close, and your competitors closer
SoLuVaBle299 (1 month ago)
Is anyone else thinking of CVS and Walgreens?
Finally this answered my curiosity
calosbabos (2 months ago)
Fuckin Teddy! >:(
Noorudheen km (2 months ago)
Totally wrong.
Jaimin Shah (2 months ago)
Agreed with this concept 100%. But other best thing one can do instead of opening the store next to one another is to open a store at the next beach where their is much of a crowd. By this they can own the business of selling ice creams by 100% and the profit doubles too + the people from different areas will know your brand name.. Will you agree with this?
2018 anyone?
Anannya Saxena (2 months ago)
What about two way roads ? The traffic will choose to be at the store that is first visible.
That guy (2 months ago)
I live in a town of about 9,000 and we have a Walgreens and CVS directly across from each other.
adegbenro agoro (2 months ago)
Keep your friends close and your enemies even closer. 😊
Rainbow Lion (2 months ago)
Wow. That seriously makes alot of sense. Now I know.
Kill ted problem solve
Ricky Ralone (2 months ago)
God damn it Teddy
Andrew s (2 months ago)
Without the Teds of this world, we may be living in the soviet union and we all saw what happened to them in 1989.
Turkish Prostitute (2 months ago)
Location and traffic matters a lot in a business
Gabe Thornes (2 months ago)
‘New fish flavour’ sounds like a great ice cream vendor
Gushie (2 months ago)
If Teddy is the 'Ted' in TED-Ed, than is my name education as in the 'Ed' in TED-Ed?
Francisco Pugliese (2 months ago)
This is an example of Prisoner's Dilemma
Ilannguaq Møller (2 months ago)
1:55 Not all north of. Some are way too far from the station in the middle as you give notion to. I think that the initial example is a bit farfetched to represent the theory.
Tristan Willstout (2 months ago)
I got a Ted-Ed | Samsung ad. wow
Epb7304 (2 months ago)
The people in the middle be like that ones one inch closer than that one
Ethan (2 months ago)
I really like the animation
Kevin Kelly (2 months ago)
Who else didn't expect this to be this complex?
Jason Tian (2 months ago)
*NEW FISH FLAVOR*
Bigfan Of Most things (2 months ago)
My answer : Because they want to make fun of eachother lol
Josh.0 (3 months ago)
Summary: The reason that similar businesses are located next door to each other is because all people are assholes.
KAL EL (3 months ago)
Keep your friends close......and your enemies closer...hahaha
Hamdullah A (3 months ago)
fish ice cream??? yuck!!!!!!!!!!!
Patrick Chubey (3 months ago)
Socially optimal Ted needs to be dealt with privately. In the hospital with 2 broken legs, Ted has withdrawn from his cousin's beach territory permanently because you don't screw with family.
Reon Dong (3 months ago)
How does he not run out of Ice cream
Leira Whitehart (3 months ago)
Funny story, I actually have a mall near wear I live, and as long as I could remember, there has been these two Chinese food restaurants like, right next to each other in the food court, and as I got older, I eventually began to wonder how one of them just doesn't go out of business, or how one of them just doesn't out compete the other, for years, but then one day, when I was ordering sweet and sour chicken at one of the places, they told me they didn't have it, even though, I know they've had it before, and so then the lady getting my order does the most surprising thing, she leans over to her competitor and asks them to complete my order by adding sweet and sour chicken! She was inciting help from her competition! Her enemy! I admit, I was kinda blown away by this for a moment, but I kinda found a sort of beauty in it. These are two separate companies willing to put their differences aside and work together to reach their goals. In harmony. That's kinda beautiful.
Steven Braun (3 months ago)
Free icecream yea
The Glorious Quran (3 months ago)
Yes, explains why there is a Wendys Tacobell McDonald’s Burger King KFC Jack in the box Chikfla Taco Time Ihop Apple Bees all down in the same block.
Admiral Aladeen (3 months ago)
because one was stubborn
elon musk (3 months ago)
plankton and mr krabs
Will Beausoleil (3 months ago)
Well Teddy is a jackass
RyanHardt (3 months ago)
2:04 why doesn't TED just move to the middle of the 75% of your territory?
Cyrus (3 months ago)
That was some unnecessary invocation of Game Theory. The reason is this: One shop is set up first. People start associating that place with ice cream. Shop 2's owner has two options: Go into a new area and wait for people to become aware of its existence and become part of their routine. *OR* just go setup a shop next to the old shop. Idea 2 is less risky and has faster returns than idea 1 as people looking for ice cream are anyway going to come to that area. Business may be about market domination but first it is about survival and break even. Idea 2 is a safe option and hence the common choice.
I Liek To Drawz (3 months ago)
1:01 Dang it Ted if you're gonna copy me at least do it on a different beach
Bryan Borrayo (3 months ago)
0:58 this makes no sense because in the case of real life some restaurant's are literally right next to eachother this is wayyy to plain of an example
Derpster (3 months ago)
So, socially optimallest solution is to build half a dozen walls on that beach. Paid by mexicans.
Dwight Gutierrez (3 months ago)
I have a question; wheter they do the SOS or the "both in the middle" don"t they serve the same amount of people anyway? What gives?
Viraj Waghanna (3 months ago)
But Why do competitors open their stores next to one another?
Non Sicuro (3 months ago)
just shoot teddy in the back of the head
rifqy fadhilah rahman (3 months ago)
Other reason is, if you acknowledge that your competitor is good in looking opportunity or good in surveying to evaluate which location is good location, then you don't have to do survey the location where your competitor located anymore because your competitor has surveyed that location and evaluated that location is a good location to build their shop. You can just build one near them without put an expensive or time consuming effort.
tattoo bobby (3 months ago)
So thats where the saying comes....
gooe dss (3 months ago)
thanks business strategy
Kieran Sam (3 months ago)
Just merge & go public already
timothy wong (4 months ago)
Or you can just kill your cousin. Problem solved
Ankush singla (4 months ago)
anyone can translate it to hindi?
sor3999 (4 months ago)
This example isn't very useful. Companies can't exactly move their "cart" around as freely as this beach scenario. There are zoning laws as well as available commercial space that can meet the needs of your shop. Not to mention many shopping centers want to diversify their offerings and aren't going to want to leave out to 2 grocery stores in the same lot.
g.n .v (4 months ago)
reason is 2nd person are parasite of the 1st
Shashank Shah (4 months ago)
Now I got to solve my life’s biggest riddle
no name (4 months ago)
wait a family member of mine actually opened a ice shop next to another ice shop lol.
Tsvetan Borisov (4 months ago)
Here comes a really resourceful Tom. He sells ice cream at 5c until you both are pushed out of business. You may complain about dumping but nobody intervenes in time. After that he sells at double the price.
KidJV (4 months ago)
fish flavored ice cream..
Ayush Patel (4 months ago)
****ing tedy ..why not kill him and take 100 % beach
Fameer Fuddi (4 months ago)
I don't think so. here's what I think the reasons are 1. Attracting a lot of customers to the same place. 2. Serving as a readily avlb substitute to the competitor's unhappy customers. 3. Collective purchasing power as it is convenient for the sellers to supply. 4. Sharing publicity and Advt cost of the collective hub.
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Shachar Petrushka (4 months ago)
that's not the real reason. when you go to buy a furniture for example you'll go to an area that has the most shops. in the mall you wouldn't go around to eat what you want but go to the area where all the food is and then decide
եհҽ եհҽ (4 months ago)
0:55 Terraria font
Allen Jackson (4 months ago)
Wait...Ted and Ed?...
The26 (4 months ago)
There are 5 different shopping malls next to eachother. -.-
Derva Kommt von hinten (4 months ago)
that makes only sense in the beach example. in a city however, thats not the case. sure, there are hotspots (for petrol stations for example). but as soon as its 3 stations it is benifitial to move away so you will still get more customers in a suboptimal position than the two stations splitting their profits.
Eclectic Reader (4 months ago)
It's to avoid a monopoly. Monopolies are not allowed in America.
Toni Vukusic (4 months ago)
F**kig Tedy
kirk jason beltran (4 months ago)
In the Philippines, Several Jolibee and McDonald's stores are often built next to, or accross each other
Adam Wong (4 months ago)
damn Ted stop being a beach!
The Corndog Hero (4 months ago)
Greed
Warren Peece (4 months ago)
Malls = synergy
blazebluebass (4 months ago)
You can't move a store like a cart. Also, I don't see your wild claims in daily life. In what crazy city do you live that all same type stores are in the same place?
AntonDubious (4 months ago)
Day 30: Teddy's frozen body is found in his own ice cream cart.
Love love (4 months ago)
Companies don't think about customers, they care about their profit 😳
Halil Şen (4 months ago)
The conclusion at 3:35 (that this leaves customers vulnerable to aggressive competition) is not quite right. If communities implement rules which distributes services through out the community and prevent aggressive competition example given in the video then there wouldn't be any vulnerability and communities would be better served...
farazsm2013 (4 months ago)
Or just poison cousin tYddy and take over his cart.
Diet Dr. Pepper Fan Club (4 months ago)
Z O N I N G L A W S
TheGamerGuy TheGamerGuy (4 months ago)
I actually saw a humorous example of this. So one time I saw a Sprint next to a Verizon. HAHAHAHHAHAHAHA!!
Big Man (4 months ago)
Gotta hire a hitman to hunt teddy then
ank luti (4 months ago)
THATS WHY you pay the mafia to kill them
AdemolaVictorTv (4 months ago)
before you know it, teddy will get two more ice cream cart, employ someone, get to the far end of your side, and boom, your sales is even less. Teddy doesn't like you, that's the true reason.
Arif (4 months ago)
So the short answer is..?
Ethan Nguyen (4 months ago)
I would literally just walk over to Ed because the line is shorter.
adrian (4 months ago)
nice
Eltjavo (4 months ago)
Keep your friends close, but your competitors closer.
roboliño schmidt (4 months ago)
If they where italians they would Just shoot each other
well that clears it up....
Matthis Voigt (4 months ago)
award estimate contain academic strategic direction wire arrest dog surprisingly service.
Obviously Anonymous (4 months ago)
I can understand this being the most effective way if both shops are equal, however, lots of places do the same thing even if their competition has cheaper and better quality goods. Wouldn't that be the worst way to organise your shop in that case?
Teddy (4 months ago)
Man, I hate myself.
Hermann Paschulke (4 months ago)
Damnit Teddy!
Connor burnetter (4 months ago)
this video is deeply flawed and another reason economics is pure ideology rather than actual science. you completely ignored the fact the whole time that people who move their carts anywhere away from the center line are still going to lose customers because of them being farther away from people who don't want to walk more than 1/2 mile to get ice cream. secondly the reasons you see cities with areas where certain types of businesses are close together is because of zoning laws. a third reason this is flawed is because the two ice cream sellers set up a cartel(when a group of business owners agree not to compete) which is illegal in a regulated market economy. in a pure market economy businesses have to compete.

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