194 QUARTERLY JOURNAL OF ECONOMICS Our hypothesis asserts that United States producers are likely to be the first to spy an opportunity for high-income or labor-saving new products.7 But it goes on to assert that the first producing facilities for such products will be located in the United States.This is not a self-evident proposition.Under the calculus of least cost, production need not automatically take place at a location close to the market,unless the product can be produced and delivered from that location at lowest cost.Besides,now that most major United States companies control facilities situated in one or more locations outside of the United States,the possibility of considering a non- United States location is even more plausible than it might once have been. Of course,if prospective producers were to make their loca- tional choices on the basis of least-cost considerations,the United States would not always be ruled out.The costs of international transport and United States import duties,for instance,might be so high as to argue for such a location.My guess is,however,that the early producers of a new product intended for the United States market are attracted to a United States location by forces which are far stronger than relative factor-cost and transport considera- tions.For the reasoning on this point,one has to take a long detour away from comparative cost analysis into areas which fall under the rubrics of communication and external economies. By now,a considerable amount of empirical work has been done on the factors affecting the location of industry.8 Many of these studies try to explain observed locational patterns in conven- tional cost-minimizing terms,by implicit or explicit reference to labor cost and transportation cost.But some explicitly introduce problems of communication and external economies as powerful locational forces.These factors were given special emphasis in the analyses which were a part of the New York Metropolitan Region Study of the 1950's.At the risk of oversimplifying,I shall try to summarize what these studies suggested. some in this paper;but he was not aware of my writings nor I of his until after both had been completed. 7.There is a kind of first-cousin relationship between this simple notion and the "entrained want"concept defined by H.G.Barnett in Innovation: The Basis of Cultural Change (New York:McGraw-Hill,1953)p.148.Albert O.Hirschman,The Strategy of Economic Development (New Haven:Yale University Press,1958),p.68,also finds the concept helpful in his effort to explain certain aspects of economic development. 8.For a summary of such work,together with a useful bibliography,see John Meyer, "Regional Economics:A Survey,"in the American Economic Review,LIII (Mar.1963),19-54. 9.The points that follow are dealt with at length in the following pub- lications:Raymond Vernon,Metropolis,1986 (Cambridge:Harvard Uni-194 QUARTERLY JOURNAL OF ECONOMICS Our hypothesis asserts that United States producers are likely to be the first to spy an opportunity for high-income or labor-saving new products.* But it goes on to assert that the first producing facilities for such products will be located in the United States. This is not a self-evident proposition. Under the calculus of least cost, production need not automatically take place at a location close to the market, unless the product can be produced and delivered from that location at lowest cost. Besides, now that most major United States companies control facilities situated in one or more locations outside of the United States, the possibility of considering a non￾United States location is even more plausible than it might once have been. Of course, if prospective producers were to make their loca￾tional choices on the basis of least-cost considerations, the United States would not always be ruled out. The costs of international transport and United States import duties, for instance, might be so high as to argue for such a location. My guess is, however, that the early producers of a new product intended for the United States market are attracted to a United States location by forces which are far stronger than relative factor-cost and transport considera￾tions. For the reasoning on this point, one has to take a long detour away from comparative cost analysis into areas which fall under the rubrics of communication and external economies. By now, a considerable amount of empirical work has been done on the factors affecting the location of ind~stry.~Many of these studies try to explain observed locational patterns in conven￾tional cost-minimizing terms, by implicit or explicit reference to labor cost and transportation cost. But some explicitly introduce problems of communication and external economies as powerful locational forces. These factors were given special emphasis in the analyses which were a part of the New York Metropolitan Region Study of the 1950's. At the risk of oversimplifying, I shall try to summarize what these studies suggested? some in this paper; but he was not aware of my writings nor I of his until after both had been completed. 7. There is a kind of first-cousin relationship between this simple notion and the "entrained want" concept defined by H. G. Barnett in Innovation: The Basis of Cultural Change (New York: McGraw-Hill, 1953) p. 148. Albert 0.Hirschman, The Strategy of Economic Development (New Haven: Yale University Press, 1958), p. 68, also finds the concept helpful in his effort to explain certain aspects of economic development. 8. For a summary of such work, together with a useful bibliography, see John Meyer, "Regional Economics: A Survey," in the American Economic Review, LIII (Mar. 1963), 19-54. 9. The points that follow are dealt with at length in the following pub￾lications: Raymond Vernon, Metropolis, 1986 (Cambridge: Harvard Uni-