Location Theory and the Theory of International Trade
The argument is conducted in purely theoretical terms. The author first examines the special assumptions underlying the various location theories, discusses the reasons for the formulation of these special assumptions and shows what happens when one assumption is replaced by another. The author then goes on to discuss the nature of any contribution which the theory of international trade may be able to make to location theory, and the manner and the extent in which location theory can contribute to the theory of international trade. After a brief introductory reference to Ricardo, the author surveys in some detail the manner in which modern theory treats the problem of the location of productions; a careful critical examination of Ohlin's position is followed by an exposition of the theory and the solutions propounded by August Lösch. Starting from the latter, the author dwells on the specific difficulties confronting location theory and attempts to add a contribution of his own to the solution of certain problems. The author holds that the basic contribution of location theory is not only greater realism, but, above all, the first analysis of a comp1ex interdependence. At the same time, he shows that it is not possible to do without the theory of international trade - or the theory of the interdependence of several markets - and that, in particular, the theory of the mechanism of the balance of payments is, in this context, the most valuable.
