Th�nen and the New Economic Geography

Abstract

In this paper, I explain Th�nen's pioneering work on industrial agglomeration. In my opinion, Th�nen's thinking on industrial agglomeration was not only amazingly advanced for his time, but in many respects remains novel even today. It is shown that if we unify Th�nen's well-known theory on agricultural land use with this pioneering work on industrial agglomeration by using modern tools, then we essentially come up with a prototype of New Economic Geography model.