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But why didn't some clever economist in the Anglo-Saxon tradition pick up central-place theory and
produce a formal model? For some length of time, say up to the mid-1950s, simple ignorance can be the
explanation: the German location tradition was simply not accessible to non-German-speaking theorists.
After the proselytizing work of Isard and others, however, the essential ideas of central-place theory
were there ready for theoretical elaboration. And indeed some very talented theorists did make attempts
to formalize the framework. Yet these attempts did not succeed, at least as judged by the test of the
intellectual marketplace.
Why? You know the answer: to make sense of central-place theory, one needs to deal with the problem
of market structure. The idea is simple enough: each firm faces a trade-off between economies of scale,
which push toward a limited number of production sites, and transport costs, which can be reduced by
multiplying the number of sites. But this description immediately implies that we are in a world in
which there are unexhausted economies of scale, and thus in a world of imperfect competition. You
can't tell a complete story about central-place formation unless you are prepared to offer some
description, however stylized, of that imperfectly competitive market structure. And that, until
relatively recently, was something economists felt unable to do.
Let me make clear that all this is not meant as a condemnation of those who developed and elaborated
central-place theory. On the contrary, they should be celebrated for the inspired and productive insights
they achieved in spite of their inability to formalize their ideas effectively. But central-place theory will
not truly come into its own until the formalization barrier is crossed.
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