Abstract
The neglect of spatial issues in economics has been “one of the great puzzles about the historical development of economics” [Blaug, 1996, p. 612]. Economic activity clearly does not take place in the proverbial head of a pin: space and distance do affect economic activity in a non-trivial way. Aimed at ending the long silence of the economics discipline on the spatial economy, a new approach developed at the beginning of the 1990s. Almost by accident, Paul Krugman, at that time already well known for his contribution to new trade theory, noticed that a small modification to his new trade models would allow the endogenous derivation of spatial agglomeration: the New Economic Geography was set off. Later, partly as a reaction to the complaints of “economic geographers proper” [Martin, 1999], the New Economic Geography became also known as geographical economics [GeoEcon, henceforth], a label that more clearly underscores its disciplinary origin. Today, GeoEcon is a well-established field of economics [Fujita et al. , 1999; Fujita and Thisse, 2002; Brakman et al. , 2001; Baldwin et al. , 2003]. 1 GeoEcon appears to have successfully brought geography back into economics.
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