why are dhabas clustered together?

so I watch this show, "Highway on my Plate" starring a Rocky and Mayur two non-skinny men, one from the south one from the north, one vegetarian the other non-vegetarian, as they travel all over India eating at local places.

It's getting to an interesting point now, because they've done so much traveling, that they begin to see some patterns emerge from their experiences. In other words, they've generated enough of a sample to see a trend. This is basically an empirical observation therefore: they say that no matter where they go, the appearance of a single dhaba by itself is never observed. Instead, there are long stretches of emptiness, followed by a sudden clustering of dhabas, followed by emptiness, and so on.

Why does this happen? For one reason, this is essentially the Hotelling model operating. In the simplest version of the Hotelling model, imagine two people competing for the custom of a local town. Call these two people restaurant owners. (Incidentally, Hotelling is the name of the guy who came up with this.) Where should they locate their restaurant? To simplify the problem to its essentials, imagine that the possible locations can be only on a single street, in fact, imagine the whole town to be arranged on a single street. So it's now just a matter of choosing where to locate on a single line.

Using assumptions on the cost functions of operating a restaurant (linear), and on the distribution of town residents on the street (uniform), it is easy to derive that the optimum location given that each hotel owners location impacts the number of consumers the other gets is the center of town. The basic intuition can be seen by seeing why any other location will not be optimal: assume one guy (A) gets to the center of town, now where should the other (B) locate? If B goes to the left of center, he will get the custom of all those to the left of his location, A will get all those to the right of his location (which is the center); but B and A will have to compete for those customers that locate between the their individual points.

Why will A get all those to the right of center? with a uniform distribution, the costs of finding a restaurant for any consumer will increase with the distance travelled, thus the result that A gets all those to the right of center, while B gets all those to the left of where B locates.

This competition between B and A can be alleviated if B shifts a little to the right. Now, B gets more consumers, while A gets the same number as before, although he probably loses a bit from before because some consumers he had now go to B. If A moves leftward he will gain a bit. B will respond by moving to the right. Eventually they will settle into the same place. However, and this is important, now either A or B can gain more by moving to the center. Thus the only place from where deviations are non-profitable for both A and B is the exact center.

Therefore, dhabas tend to cluster, and what's more, they should cluster somewhere in the middle of the cities. The episode on Ranchi I was watching appears to confirm the second result, but of course that is just one observation.

However there is also probably another reason, in that reciprocity - you benefit from having another dhaba nearby, in case one of your cooks doesn't show up, then you can borrow one from a nearby dhaba, with the understanding that in the future you will lend one of yours - can be another reason to locate nearby. Or they can take advantage of co-location and share electrical generators. This is more subtle reasoning, because it is a dynamic argument as opposed to the Hotelling model above which is static.

I just watched Exit through the Gift Shop, a documentary on street art that asks similar questions to those asked by the people who liked Iron Maiden and Motorhead and Metallica, were convinced this music would be big, however it was the glam rock bands that got big, which became a bit of a problem. Because it appears to prove that most people seem to prefer the inferior product, or are unable to tell the rip-offs from the originals.

nerd

"i'm getting sick of this drinking tea everyday, I want something new to drink. Day after day, din par din, chai pe chai, milord!..."

"you could try coffee, you know"

"but it's going to be instant, no?"

"yes, you should try this spoon, take two spoons of coffee and one of sugar, but only with this spoon with this particular combination...there's some non-linearities inherent in this particular production process"

"okay"

contention

"you know, I'm glad you stuck with this...I can see you enjoy this..."

"yeah, we were pretty skeptical in the beginning, but you've convinced us. It's good you were persistent..."

(n-2) obstacles cleared. good relations established. good topic chosen - both important and interesting. most important: the topic is mine, thus independence also (endogenously) arises.

so far, therefore, so good. now to make the good better!

fuel price hikes

apparently the price of petroleum (gasoline in american) has been "deregulated" in India, with the obvious impact being the price rising because the subsidy provided is gone.

I found this reaction to be somewhat hilarous (found on NDTV's live TV): "you know, the common man has been really hurt by this...I have a Santro and an Accent and now I have to think whether I want to drive my Accent..."

I might wager that this is perhaps (partly) the point of making consumers face the "right", or at least, a "less wrong" price?

Oh, you thought I'd go after the fact that this supposed common man has two cars in a country where the number of malnourished children out number those in sub-saharan Africa, didn't you?

Deregulating the price of fuel is a brave step, but I'm not entirely sure a wise one. Of course, the people making this decision would (should?) have thought about this before. The "right" price arrived at by a calculation that does not allow for some weighting of those worse off isn't right, after all. "Free" markets, that elusive concept, are not going to put weights on anyone.