10
In Diagram 1, the concept of administrative regions is superimposed upon Von Thünen’s
concentric circle model. The inner circle A represents the central urban area. Similarly, P0P1 and P1P2
respectively respresent the distance of the first and second rings around the core. This defines the
concentric circles. The urban area A represents an administrative core region. Contiguous to the core
region is an area whose administrative boundaries are indicated by bcde. This area is an adjacent
region which encompases, for example, three urban centres, u. This adjacent region falls within the
first concentric circle ring. Juxtaposed to the adjacent region is a region, abef, which falls in the
second concentric circle ring. This region is a periphery region consisting, for example, of two small
towns, t. Jointly, these three regions define the CAP model. The distance from the core to the outer
periphery is represented by the radius P0P1P2.
[Figure 1]
The simple three-region construct in Diagram 1 presents a seamless geographic expansion of
domestic regions in one direction along a radius away from the core region. If we assume that the
three regions compose a single country, then this three-region construct becomes a national model of
centrality with the endogenous forces of economic geography operating between three regions,
conform the theoretical models of Fujita, Krugman, and Venables (1999).
The introduction of the adjacent region is significant because of its geographic location.5 Its
proximity to the core enhances its relative attractiveness for industry location versus the periphery
region. The adjacent region, by definition6, is significant for industries reliant on strong forward and
backward linkages. Any wage differential, between the core and the adjacent region, compounds the
attractiveness of this region for industry location, and the ability to retain profitable access to the core
region.
Centrality is the CAP model’s primary focus, however, at the domestic regional level, the
model allows for the identification of one or more national core regions. In addition, it is readily
5 In the Forslid et. al.,(1999) paper pertaining to industry relocation, firms relocate either from the outer core to the inner core
or vice-versa, and from the core to the periphery. The inclusion of an adjacent region or country eliminates this gap.
6 For the definition of an adjacent region see Section 2.4.