Location Theory, Agglomeration and the Pattern of World Trade

  • Walter Isard


When Professor Ohlin invited me to present a paper to this conference, he asked me to discuss agglomeration economies, particularly as they are related to the advantages of being a firstcomer, or a latecomer. Hence you have a paper which emphasises a lot of good, old-fashioned location theory — aimed at exposing some of these advantages. I use concepts such as isodapanes and margin lines. But I imagine that a more fundamental reason for my being here is to be involved in a continuing discussion on the interrelations of trade and location theory — whether location theory is a special case of trade theory, whether trade theory is just a special case of a general location theory, or whether they are one and the same thing. My opinion is that ‘realistic’ trade theory and ‘realistic’ location theory are one and the same thing. They are as the two sides of the same coin. Flows of goods, factors (labour and capital) and ideas are between locations. To be able to fully explain these flows, we necessarily must come to know and simultaneously explain what exists at these locations. Or, to be able to fully explain what exists at a set of interacting locations, we must come to know and simultaneously explain the flows of goods, factors and ideas among these locations.


Average Cost Location Theory Scale Economy Industrial Complex Trade Pattern 
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© The Nobel Foundation 1977

Authors and Affiliations

  • Walter Isard

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