Suppose that two owners of refreshment stands, Jane and Oliver, are trying to decide where to locate along a stretch of a road. Imagine there are three points along the road, with point A at the left end, point C at the right end, and point B in between A and C. There are 100 customers located at even intervals along this road from point A to C, and a customer will buy only from the closest vendor.

Imagine that initially Jane locates at point A while Oliver at point C. This would minimise customers' average travelling costs and would result in each vendor getting one half of the business.

However, if Jane moves from point A on the left to point B in the middle, she would keep all customers to her left, and get some of Oliver's customers. To compete, Oliver would also want to move towards point B in the centre, so that he can keep the customers to his right, while not losing the customers who are at the centre to Jane. Thus, in order to gain the most customers, both vendors would eventually locate together in the middle.

This story is an example of a model developed half a century ago by Harold Hotelling, and is called Hotelling's model. Though it can give some insights into businesses' decisions concerning location and product characteristics, the model is equally useful in explaining certain political phenomena.