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stories that are needed to do meaningful economic geography in a way that mainstream economists can
live with.
The formal model is given in the appendix. All that we need to talk about now are a few general aspects
of the approach. I imagine an economy with a number of separate locations. (It is possible to deal with a
continuum of locations as well; indeed, there are some very interesting ways of looking at
agglomeration in a continuous spatial economy, but I won't go into them here.) There are two sectors:
agriculture, which is geographically immobile, and manufacturing, which is mobile over time. The
geographic reallocation of manufacturing is, however, not instantaneous; it turns out to be important to
introduce at least a rudimentary story about dynamics.
Manufacturing consists of many firms producing differentiated products; increasing returns ensure that
not all potential goods are produced, and thus that each plant produces a unique good (thereby justifying
the Weber assumption that each good is produced at a single location). The monopolistic competition
assumption neatly, if implausibly, disposes of problems like strategic behavior. All that firms need to do
is choose an optimal location, taking into account the spatial distribution of demand and the
transportation costs they must pay.
The way I've described it, the model doesn't sound like much. Actually, it is remarkably hard to come
up with a formal structure that simultaneously includes increasing returns and the resulting imperfect
competition, transportation costs, and factor mobility and that you can still work with. But anyway, I
have such a structure. What does it tell me?
The most important thing I learned is that all of my first four traditions in spatial analysis Germanic
geometry
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