Final answer:
The proximity of drugstore chains in neighborhoods exemplifies the Hotelling Model, where businesses with similar products agglomerate to capture maximum customer potential. The Central Place Theory provides additional context by emphasizing how centrally located businesses attract more customers, leading to urban growth.
Step-by-step explanation:
The distribution of drugstore chains closely situated to each other in a neighborhood illustrates the Hotelling Model of service technology. According to Harold Hotelling, when firms sell similar products, they tend to agglomerate in a location to maximize customer potential, as customers will typically travel the shortest distance to purchase their desired product. This model helps to explain why drugstores are often found near each other, as they strive to capture the highest number of customers within a neighborhood, ensuring convenience and reducing the distance consumers have to travel for services.
The Central Place Theory also offers insight into this pattern, suggesting that more centrally located businesses will attract more customers due to the convenience of their location. Over time, these more successful centrally located businesses enable surrounding villages to grow into towns and cities. However, the difference between the Hotelling Model and Central Place Theory is that the former focuses on the competitive aspect of similar businesses clustering together, while the latter is more about the organically growing pattern of urban hierarchy based on consumer needs for goods and services.