ABSTRACT
This chapter considers the simplest case of a closed region with a single node. The node arises from a class of compatible economic activities, and there is another class of activities that do not agglomerate. Individuals may belong to either one and they may change sectors. But there is no other interaction what so ever explicitly recognised between sectors; and the only function of the alternative sector is to provide a source or sink that captures population movements toward or away from the city. There is a single product of urban activity at the centre. Consider the value an individual attaches to one of the two commodities at different levels of relative scarcity. The spatial equilibrium condition of R. F. Muth has an intuitive meaning. In other words, it reveals a certain complementarity between the two types of location cost around an optimal location. This complementarity evolves as a manifestation of the marginal principle in space.
