【正文】
assumes perfect petition and constant returns to scale. Krugman basically says that neither of these assumptions is likely to be correct in today’s world, ., he argues that imperfect petition and increasing returns to scale are more likely to be true. In this world of imperfect petition and increasing returns to scale, trade will be driven by things like market size and, very importantly, external economies, of which increasing returns is an example, as is labour pool effects, specialist supplier effects, etc. What we observe in practice in such a world is a concentration or clustering of industries in certain locations and a kind of selffulfilling prophecy whereby once a region gets ahead, it stays ahead, ., growth begets more growth. Although Krugman sets forth his theory to explain international trade, he also argues that these factors of increasing returns and external economies are most likely to be found at the local or regional level. In other words, they explain the economic specialization and growth of small areas and only by extension, of whole countries. So now, a theory of international trade has been turned into a theory of regional development. One of the more important characteristics of this theory is the fact that once specialization happens, it gets locked in by the cumulative gains that it produces. So it continues indefinitely unless there is some external change that alters the profitability of enterprises and forces them to adjust Transport costs will matter in this process because if they are too high from a particular location, then that location will not be used. So they must be low enough that they do not offset the economies of scale benefits of a particular location. If they are really low, of course, then they simply do not matter. This, as we will see shortly, may be very important for socalled information ind