Question

Why do competing firms often locate their stores in close proximity to each other? For example, gas stations always built right next to other gas stations. Fast food chains, grocery stores, coffee shops, and restaurants always seem to exist in groups instead of being spread evenly throughout a community.

CAN YOU PLEASE MAKE THE ANSWER AT LEAST 100 WORDS.

Answer 1

This is a common phenomenon: competing companies locating their stores close to one another. It is very common with fast food stores, gas stations, banks, mattress stores, coffee shops, pharmacies, big retailers, and so on. It doesn't seem to make sense, but there must be a good reason for it to be so common.
When competing firms are in close proximity it is called clustering

Businesses want to locate near the center of their potential customer population in order to attract the largest number of customers. When there are multiple competitors it would make sense to spread out if they were working together so that each competitor would have a share of the customer population. But competitors aren't working together so this kind of arrangement won't work

So every competitor will make the same decision simultaneously to move to the best location. Nash Equilibrium occurs at "the point where none of you can improve your position by deviating from your current strategy." Nash Equilibrium occurs when all competitors in terms of potential customers have moved to optimum location. Basically, there are only a few (maybe only one) optimal locations for different population density areas and competition mathematics drives all competitors to the optimal position.