1ST NATURE, 2ND NATURE, AND METROPOLITAN LOCATION

Economies of scale, transportation costs, and factor mobility can inte ract to produce agglomerations even in the absence of any pure externa l economies. This paper offers a monopolistic competition model of a c ity that serves an agricultural hinterland; unlike most analyses in lo cation theory, the model is fully general equilibrium, but it has stro ng links to older concepts in geography, notably the idea of ''market potential.'' The analysis shows that the forward and backward linkages that hold a population concentration together also allow that concent ration to occur in a variety of possible sites-that is, there are mult iple equilibria (indeed a continuum) for metropolitan location.