The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Location Theory

  • Jacques-François Thisse
Reference work entry


Location theory deals with what is where. ‘What’ refers to any possible type of economic activity involving stores, dwellings, plants, offices, or public facilities. ‘Where’ refers to areas such as regions, cities, political jurisdictions, or custom unions. The objective of location theory is to explain why particular economic activities choose to establish themselves in particular places. Here we focus on spatial competition theory between firms, where locations are subject to attracting and repelling forces. We then extend this framework in order to account for the residential choices made by consumers.


Agglomeration forces Clusters Collusion Dispersion forces General equilibrium Globalization Hotelling, H Land use Local labour markets Location theory Nash equilibrium New economic geography Oligopolistic competition Partial equilibrium Principle of Differentiation Product differentiation Spatial competition Stigler, G Transportation costs Urban economics 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Jacques-François Thisse
    • 1
  1. 1.