When is the economy monocentric?: von Thünen and Chamberlin unified

Abstract Since The Isolated State by von Thunen, countless versions of the von Thunen model have appeared. It seems, however, that a fundamental question remains unanswered: Why should all manufacturing goods be produced in a single town? In this paper we develop a monopolistic competition model of an ‘isolated state’, and investigate the answer to this question. Since the answer to this question suggests when there will be more than one town in the isolated state, it is hoped the present model will lead to the development of a general equilibrium model of urban systems.