Krugman showed why an industry clusters in one city instead of spreading out evenly
Paul Krugman's 'new trade theory' explained a pattern classical economics struggled with: industries often cluster tightly in one region, like cars in Detroit or tech in Silicon Valley, rather than spreading evenly across a country. He showed that once an industry gets a head start somewhere, economies of scale and easy access to suppliers and workers reinforce the cluster, making the advantage compound rather than even out.