Over more than two centuries the developmentofeconomic theory has
created a wide array of different concepts, theories, and insights. My
recent books, Capital and Knowledge (Zhang, 1999) and A
TheoryofInternational Trade (Zhang, 2000) show how separate economic
theories such as the Marxian economics, the Keynesian economics, the
general equilibrium theory, the neoclassical growth theory, and the
neoclassical trade theory can be examined within a single theoretical
framework. This book isto further expand the frameworkproposed in the
previous studies. This book is a part of my economic theory with
endogenous population, capital, knowledge, preferences, sexual division
of labor and consumption, institutions, economic structures and exchange
values over time and space (Zhang, 1996a). As an extension of the
Capital and Knowledge, which is focused on the dynamics of national
economies, this book is to construct a theory of urban economies. We are
concerned with dynamic relations between division of labor, division
ofconsumption and determination of prices structure over space. We
examine dynamic interdependence between capital accumulation, knowledge
creation and utilization, economicgrowth, price structuresand urban
pattern formation under free competition. The theory is constructed on
the basisofa few concepts within a compact framework. The comparative
advantage of our theory is that in providing rich insights into complex
of spatial economies it uses only a few concepts and simplified
functional forms and accepts a few assumptions about behavior of
consumers, producers, and institutionalstructures.