This introductory chapter provides a historical framework for world commodity markets. It considers four major themes. The first theme reviews the significance of primary commodities in the overall economy at different stages of economic development. The second tracks the long-run decline in bulk transport costs and explores the implications of this decline for the establishment of markets with a global reach for an expanding group of raw materials. The third theme focuses on the twentieth century. It demonstrates the greatly expanded role of public intervention and control in primary commodity production and trade from the early 1930s until the late 1970s, and the subsequent retreat of government involvement in favor of market forces. The fourth treats the recent strong growth in emerging economies, which has had, and continues to have, a profound impact on the world commodity markets.

The core model of geographical economics takes the spatial equilibrium concept a step further. In contrast to urban economics, spatial interactions between different locations or regions are essential. Regions are connected by introducing transportation costs between different locations. Real wage differences between regions determine migration flows; these flows continue until real wages between regions are the same and a long-run equilibrium is established. The model is an extension of the well-known monopolistic competition model that is popular in international trade theory. In contrast to trade theory, the geographical economics model involves labour mobility between regions. The model is characterized by multiple equilibria that can either be stable or unstable.

The core model of geographical economics takes the spatial equilibrium concept a step further. In contrast to urban economics, spatial interactions between different locations or regions are essential. Regions are connected by introducing transportation costs between different locations. Real wage differences between regions determine migration flows; these flows continue until real wages between regions are the same and a long-run equilibrium is established. The model is an extension of the well-known monopolistic competition model that is popular in international trade theory. In contrast to trade theory, the geographical economics model involves labour mobility between regions. The model is characterized by multiple equilibria that can either be stable or unstable.