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I am sure you have noticed that several gas stations are often found next to or very close

I am sure you have noticed that several gas stations are often found next to or very close

I am sure you have noticed that several gas stations are often found next to or very close to each other
at highway intersections. They also often have same or similar prices. If one gas station tries to increase
its price from the prevailing $2.89 to $3.09, customers will go across the street and the gas station will lose revenues.
If the same gas station lowers is price to $2.69, it will attract new customers only until the other also drop their
prices.What graph can be used to explain this behavior and why do gas stations behave this way?

Johnson 09-Nov-2017

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