We study the relationship between the level of specialization and the number of firms in a market using the spokes model. The model focuses on non-localized spatial competition and also allows for the presence of segments of the market where other firms have not located. We endogenize location in the spokes model and show that firms' optimal location (specialization) depends on the number of firms, the number of unoccupied spokes and whether consumers are captive or not. We also provide empirical evidence based on the specialization choice of Dutch car repair garages. We find a robust relation between specialization and the number of competitors.