The model suggests why competitors always seem to locate so close to each other and compete on real estate. Think about big burger chains, supermarkets, and video stores. You will almost always see them clustered even though it would be nicer if they spread out.
The model also has been applied to political candidates. Imagine two candidates picking a platform on a political spectrum from -1 (very liberal) to 1 (very conservative). If voters pick the candidate closer to their views, and voters are spread out across the spectrum, then both candidates would converge to the middle. It’s no surprise that politicians seek the “average vote.” It also suggests why it’s so hard to tell the difference between candidates during the campaign trail.
I have another application. I think a similar concept occurs in TV news. These channels compete for attention, and they can choose to pick stories that appeal to any number of customers. It would be nice if they talked about different topics, but that doesn’t happen. We end up with the same story being reported in virtually all news outlets instead of having hundreds of different important stories being reported.
That’s why the web has been so liberating. Entry is cheap, so information stands set up all over the spectrum. You can get news stories on whatever topic you are interested in. It’s kind of neat.