NEGATIVE FEEDBACKS IN THE ECONOMY AND INDUSTRIAL-LOCATION

Incorporating regional asymmetry and negative feedbacks (congestion) i n a model of economic geography and international trade shows that com plete specialization of production at one location is unlikely. We ide ntify an agglomerating force: the home market effect, and two spreadin g forces, competition for demand from immobile sectors of production a nd congestion. We demonstrate that negative feedbacks can explain the economic viability of small industrial regions observed in the real wo rld. Simulations clarify the basic structure of the model.