| The urbanization is the important phenomenon in the economic life of our times. It is a result of modern economic development, and is also the motive force of promoting the development of economy in turn. Since the market-oriented reform in China in the late 1970s, the urbanization degree has been improved a lot. But the whole level of development still lagged behind in national economy. One of its important reasons is that people can't understand the essence and inherent law of urbanization clearly. One of essential characteristics to the urbanization is urban economic spatial concentration or convergence, which academic circles and government departments can't know enough. Is this characteristic related with the evolution of economic system? Which kind of the inherent relation is it? Theoretical economics hasn't paid attention to the basic theoretical research, but regarded the emergence and development of city as a kind of geographical phenomenon for a long time. People's study on urbanization has aimed at formulating policies, which isn't based on fundamental theory, so research of urbanization is like a tree without roots, altering with change of the short-term goal, and the policies had very little effect. For this reason, the paper, based on predecessors' research of urban agglomeration, attempts to probe the economic reasons of urban economic agglomeration in terms of basic economic theory.The paper's basic viewpoint is that agglomeration is the essential characteristic of urban economy, and the evolution of division is the basic reason of urban economic agglomeration. So the analysis launches along tow threads. One isdivision of labor→cooperation→ cooperation costs→ institution→informal institution→spatial agglomeration, which means that division of laborleads to cooperative tendency inevitably, that the existence of cooperation costs makes the realization of cooperation depend on institution tightly, and that the realization of cooperation depends on specific form of spatial agglomeration underinformal institution. The other is division of labor→positive externalities→convergence, that is, division is the important source of positive externalities, when positive externalities can't be obtained remotely or should realize through agglomeration, urban agglomeration emerges thereby.This paper points out at first in" introduction", the essential characteristic of urban economy is its agglomeration, which includes concentration and convergence. Concentration is characterized by all kinds of industrial concentration or market concentration. Convergence is continual self-convergence. Urban economic agglomeration can be divided into two kinds of basic types. One is industrial agglomeration, which means that a lot of enterprises of different ownership, tied by market relation, are in the spatial concentration or convergence. The other is enterprise agglomeration, which means that factors of an enterprise are in the spatial concentration or convergence because of scale expansion. These tow kinds of agglomeration are base unit that the paper analyses.Chapter One comments the existing articles on urban economic agglomeration, including cost factor determinism, theory of external reason, theory of transaction cost and so on. Those articles have probed structure, feature, mechanism and edge range line of urban economic agglomeration. However, those articles had two serious faults in the research of agents of agglomeration. One is the fault on analysis frame, which is that all of the articles, based on neoclassical economics, can't explain externality agglomeration or spatial agglomeration in non-equilibrium. The other is the fault on those conclusions, which can't explain the essential economic agents of urban economic agglomeration completely. Because of the two defects and the lack of the issue on urban spatial agglomeration in major economic theory, basic theory hadn't been able to explain the essential agents of urban spatial agglomeration for a long time. The paper is attempting to...
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