Agglomeration and Central Place Theory: A Review of the Literature

This paper reviews and evaluates the analytical literature on the interdependencies of agglomeration and central place theory. It is emphasized that economic agents (firms, households) tend to cluster at points of differential centrality on the economic landscape, and that this clustering process can provide even further savings to both producers and consumers. The agglomeration phenomenon is examined at three scales: (1) firm-level analysis focuses on uncertainty, shopping behavior, and spatial equilibria of the economy; (2) settlement-level analysis focuses on static and dynamic city-size models; and (3) system-level analysis focuses on city-size distributions, flows, and evolutionary processes in central place systems. The paper ends with suggestions concerning future research directions.