I think harold hotelling's explanation of the phenomenon that "sellers all go to the middle and finally come together" is biased. The explanation claims that the reason for the seller's move is to reduce the transportation costs of buyers and attract consumers who may be wooed by competitors. To judge whether the proposition of this explanation is correct, we need to do some verification work. Supporters of this model point out that if the seller is difficult to move, he will have such a motive, and he will move as long as conditions permit. There are Metro Supermarket and Carrefour Supermarket around Southwestern University of Finance and Economics, which are within 5 kilometers apart. According to harold hotelling's explanation, we should be able to observe the measures taken by supermarkets to reduce the transportation costs of consumers. I did observe the free buses provided by Carrefour supermarket for nearby consumers, but I didn't observe the buses provided by Metro supermarket. Therefore, I doubt the explanation provided by the model.
In fact, some small vendors have been observed gathering together before. Although sometimes we can't all get together, some people will always get together, and the different groups formed must be far apart. But I haven't really thought about it, or thought about it, but there is no good idea to explain it. It was not until I accompanied my friends to the Sichuan Provincial Gymnasium to participate in the first Huaxi Cup Go Competition held by Huaxi English School that I saw two maintenance service providers standing together with a brand. On a whim, we began to discuss this phenomenon, so I had a convincing explanation for this problem and told my friends.
I noticed that although these manufacturers compete with each other in the market, they always do business together, and there are still some premises to explore. For example, first of all, it is convenient for all the belongings of these vendors to move, which is why I only observe the results of gathering together and can still imagine their moving process; Secondly, the number of these traders is small, far from or even tending to a completely competitive market. Moreover, often even the monopoly competition mentioned in the textbook can not be achieved. For the latter, it made my mind suddenly clear. The products provided by these manufacturers are often very small in mutual substitution and the scale of operation is not large. Technical content is occupied by competitors, making it easier to enter and exit the market. This is very small from the perspective of a perfectly competitive market. In addition to the difference in the number of manufacturers, the last big difference in this period is information. I use my head to get information. If the market formed by those small vendors is completely competitive, it means that they have a complete understanding of each other's sales strategies. Back to reality, the profits of small traders are often meager. Due to the opportunity cost, there are not many people involved in doing business in the market. The scarcity of sellers in the market determines that the market formed by their roles is not completely competitive, and each has the ability to determine the price of its own goods. If those manufacturers don't do business together, it's difficult to grasp what strategies his opponents use to attract buyers. The strategies that manufacturers want to know include: how to set the price, service attitude, how to publicize their products, and whether the competitors slander themselves. These strategies may increase their market share when the opponent's strategy remains unchanged, and may reduce their market share when the opponent's strategy remains unchanged. Because it is an imperfect competitive market, prices can fluctuate flexibly. Even if the service attitude, transportation cost and other influencing factors are the same, one party can attract consumers who originally belonged to the opponent to its own side by setting a lower price than the opponent, so every seller always tries to understand the opponent's competitive strategy, especially the price strategy, publicity strategy or whether his goods are vilified by the opponent. If they are far away, no matter how much they have to pay to get this information, then according to the law of demand, manufacturers always try to reduce the cost of searching for rival strategies. For vendors, moving is the best choice in the conceivable scheme, so the phenomenon we finally observed is that vendors get together. What I want to say is the strategy of squeezing into the middle in order to save consumers' transportation expenses and attract customers. For every manufacturer, isn't this a strategy for competitors to attract buyers? Manufacturers want to know the opponent's strategy, because they can choose the strategy if it is beneficial to them, and take countermeasures if it is unfavorable. In short, it is to prevent consumers from feeling that their goods are lower in value than those of other manufacturers (including high price, poor service attitude and long distance). The strategy of saving the buyer's transportation cost can increase his market share, so when the opponent exercises this strategy, he will also exercise this strategy. In harold hotelling's place, the sellers crowded into the middle and finally got together. I have already said-I think this is very important-that the number of manufacturers we investigate is limited, and it is impossible to form a completely competitive market? According to my explanation, if there is complete competition between manufacturers, they will not always squeeze into places where the transportation cost of buyers is lower, and finally squeeze together. This speculation can be tested in the real world. Moreover, according to harold hotelling's explanation, if there are no consumers in a street, and consumers live outside the street, then vendors should be crowded on both sides of the street. Is that so? For example, in the commercial city of Tianshui, my hometown, there are many vendors selling a snack called "Mianpi". They line up along a street, almost completely competing with each other, and their opponents' strategies, especially price strategies, are very cheap. I've never seen vendors always scrambling to squeeze into the middle or both sides. Opponents can be said to be because of market regulation, and motivation is not equal to realization. In my opinion, harold hotelling has a verifiable inference here, that is, where consumers can save transportation costs most than other vendors, the Industrial and Commercial Bureau can levy higher taxes on vendors! After eating snacks in my hometown for so many years, I have never heard of any noodle stall in the commercial city that pays more taxes than others.
Looking back on what I said, I feel that if an industry has a large number of manufacturers and supports a nearly perfect competitive market, even if they are convenient to move, they will not necessarily crowd together. I am referring to the situation put forward by harold hotelling. The number of sellers is very small. My explanation is that they are always crowded together. Suppliers began to save the cost of searching competitors' strategic information. The strategy of finding an opponent is for your own benefit. Because it is a good strategy to position ourselves in a place where the transportation cost of consumers is lower, which is good for us and everyone is crowded together. At this point, both explanations seem to make sense. If we want to distinguish which explanation of the phenomenon of "crowding together" is more convincing, one way is to increase the number of vendors and form a completely competitive market. Assuming that every manufacturer pays the same tax at this time, if they don't crowd together, my explanation is more telling than harold hotelling's. If they are still crowded together, then harold hotelling is more telling than I am. If it is futile to try to verify the explanation in a perfectly competitive market, there is another way, that is, to levy different taxes on vendors. When taxes are the same, they will squeeze into a "point". According to harold hotelling's explanation, the government can auction this "point" first, and then collect lower taxes from this "point" away from this "point" according to the auction price (as described by harold hotelling). In this way, the government can maximize its own tax revenue, so this phenomenon should be observed in reality. Can you observe it? I don't know if others have observed it. I haven't observed it.
Back to the discussion of supermarket phenomenon at the beginning of my article, there is another phenomenon in their competition, which I think can be used as proof of my explanation here, or can be explained by my explanation, that is, the price difference refund system. Carrefour supermarket clearly stipulates that if the price of goods here is higher than the price of the same goods in other supermarkets within 5 kilometers, the price difference will double. The establishment of this system is obviously to save the cost of searching competitors' pricing information within 5 kilometers. What is the connection with saving consumers' transportation expenses? So, I think my explanation is at least a little better than harold hotelling's.
These ideas have been formed in my mind for a long time. Later, I read an article in an issue of Economics Izvestia that Mr. Zhang Wuchang insisted that people are "birds of a feather flock together" in order to save the cost of searching information, which has the same effect. My ideas, though somewhat original, are hardly guaranteed to be the wisdom of some sages. Even so, it's always good to have your own ideas, so write them down for yourself.