A number of years ago my husband and I went to Hamilton Island in Australia on a vacation.

We hadn't done a lot of in depth planning because we had opportunistically tacked it onto a work trip of mine.

It appeared to be a cute remote island amid the Great Barrier reef with a small downtown and a few different resorts.

When we got there, we realized that all of the restaurants in the downtown were affiliated with the same entity that managed our hotel--you could sign the check with your room numbers.

It was the off-season, so any given day half of the restaurants were closed. The next day, the staff from one would be working at one of the other restaurants.

It turns out the entire island and every "business" on it was run by one company--basically a cruise ship permanently berthed in one remote port.

This felt like a total bait and switch to us. But why?

We thought we were going to a city, but we were going to a disneyland.

When we see a city, we assume that the various businesses within it are, by and large, independent.

They are competing with one another to attract customers and stay afloat, meaning that they have to maintain some level of quality to survive the selection pressure.

Any given entity won't take actions to directly harm itself, but one restaurant absolutely will take actions to differentiate itself from its competitors, indirectly harming its competitors.

Hamilton Island gives the appearance of a normal city with competitive businesses, but actually it's all one entity competing for tourist traffic vs other destinations as a whole.

The basis of competition is not within the island economy, as you'd expect, but between the island and other destinations, a more indirect competition.