Faith Club

5.12.03 11:23
Check out the economic theory called The Hotelling Effect -- if there are only two options, each will become more similar to the other in order to grab the people who are in the middle ground.

A good example is a beach, X units long, with two snack carts on it. Assume one is at .25X and one is at .75X -- they each have access to .5X and will get half the consumers on the beach who want snacks (assuming people walk to the nearst carts, prices, selection and service are the same, etc.). Now say the first guy moves to .33X. He still gets everyone from 0 - .33X coming to him, but now gets half the people from .33X - .75X, stealing business from guy 2, who promptly moves to .66X to make up for it. Eventually they end up at .49X and .51X (or both at .50X if you want), glaring at each other, each still getting 50% of the business, any intermediate gains lost.

And of course, the people at the ends of the beach get screwed. Now think of the snack shops as Republicans and Democrats. There ya go.

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