Question

Automobile dealerships are often clustered together in the same location. Such clustering increases competition between dealers and permits shoppers to negotiate for lower automobile prices. Why would automobile dealers decide to cluster if it results in more competition and lower prices they receive?

Answer 1

Reasons for clusters are as follows-

• Single Destination- that makes a lot of of client visits on a routine
•Better look- it's sort of a mall, thus a lot of individuals square measure attracted and therefore a lot of sales
•Tax incentives - the native municipalities offer such incentives so as to push such markets above all space for development functions
•Though the costs might tend to be lower however the sales square measure terribly higher therefore filling the losses
•Competition would possibly increase however all of them have agreements that build the fight restricted and therefore profit all