Author
Bin Zhou
   Department of Geography  
   Southern Illinois University Edwardsville
   Edwardsville, IL 62026  

   E-mail Bin Zhou

Title
Trade Theory and Location Theory.

Abstract
This paper develops a trade model that allows examining the roles 
of productivity and the numeriare in determining absolute and 
comparative advantage, analyzing multi-region and multi-commodity 
trades, revealing causes of consistent, opposing, and dichotomy trades, 
expressing concepts of classical trade theory, neoclassical theory, 
New Trade Theory, and competitive advantage theory in a unified 
framework, and incorporating money in trade analysis. The paper 
recasts location theory in an exchange framework using the trade 
model developed. Central places are shown to specialize in particular 
functions as a result of absolute and comparative advantage associated 
with the size of businesses and resource constraints of places of 
different sizes. Allocation of agricultural system/land use surrounding 
a city is achieved as a result of resource endowments and industrial 
resource use intensity. The industrial location model is placed in a 
regional exchange economy, and the optimal location is found to be the 
location of actual exchange between export and import. The paper reveals 
the trade theory and location theory can be treated with the same exchange 
mechanism.

Key Words: trade, comparative advantage, location, theory.

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