SITE MAP SEARCH! E & B GEOG RESOURCES A-Z INDEX

## Exercise: Spatial Competition

##### (http://faculty.washington.edu/krumme/450/exercises/bigsmall.html)

Wal-Mart ("Big") and Value Hardware ("Small") selling similar products are considering opening a new store in one of four towns located on a given highway somewhere in Kitsap County. The total population of the four towns is 50,000 (as distributed on the graph below); the towns are equally distant from each other (10 miles).

#### Distribution of Total Population ( = Market):

 ``` A Town B Town C Town D Town ______ ______ ______ ______ | | 10 miles | | 10 miles | | 10 miles | | | 20%|----------| 20%|----------| 40%|----------| 20%| |____| |____| |____| |____| ```

Expecting community opposition and/or competitive responses, the two companies are keeping their plans secret until it is too late to respond to the competitor's eventual location disclosure. Where (in which of those 4 towns) would you expect the two to locate their respective store given the following, generally known information:

1. If Wal-Mart's store is located closer to a town, it will capture 80% of the market.
2. If Value Hardware is nearer, then the Walmart will capture 40%.
3. If both companies' stores are equally distant, including being located in the same town, then Walmart will capture 60%.