Abstract: The impact of location on trade is an age-old problem, however, as a cross field between regional economics and international economics, it has been excluded from the mainstream economics. Both as Nobel Prize winner of economics, Ohlin and krugman focus their attention on the cross field of location and trade, creating respectively the interregional trade theory and new economic geography, from which the significant influence of location on trade can be seen. Through comparison and clarification of the inheritance and development relations between the two big theoretic systems, and on the basis of analysis of the mutual influencing mechanism between location and trade, this paper reveals that the essence of trade is a location problem, an equilibrium result of spatial distribution of the supply and demand.

Key words: location; trade; interregional trade theory; new economic geography