Why competitors cluster together · Wikipedia
Imagine a beach with customers spread evenly along it. Two hot dog vendors need to choose where to set up.
The "optimal" layout would be at 25% and 75% — each vendor gets half the customers, and nobody walks far.
But that's unstable. If you're at 25%, I can move to 26% and steal customers from the middle. You respond by jumping past me. We leapfrog until...
Nash Equilibrium: Both vendors end up in the center, back-to-back. Neither can improve by moving alone.
The result is worse for customers — people at the ends must walk further. But competition drove us here.