9321065 Krugman This research will develop models on the spatial structure of urban systems, with the emphasis on the forces leading to uneven development; and the role of the geographic clustering of industries in trade. The theoretical work builds on models of imperfectly competitive markets to draw out the tensions between the set of attractive forces that lead to the clustering of particular industries at regional centers, and the repulsive forces that limit the size of such concentrations. It is expected that the modeling would explain the hierarchial structure of cities with higher- order cities engaged in the production of goods and services that reflect greater economies of scale or lower transport costs. The empirical research will use data on Mexican manufacturing to test the effects of, for example, NAFTA on Mexican urban systems. The models on industry clustering are used to study whether regional economic integration in Europe will promote a greater degree of industrial concentration. This project is of significant interest because it attempts to link international trade and interregional development patterns. The results from the study promise to give us a better understanding of the internal geography of major urban areas as well as the adjustment issues raised by economic integration prospects in Europe. ***
