With the New Economic Geography (NEG) approach it is possible to discuss theoretically the distribu-tion of firms and labor between regions. This research work analyses the spatial allocation of mobile labor and firms within the NEG approach when the region`s area and therefore the usable land, dis-tance for transportation of goods within regions as well as competition in land use for living, manu-facturing and agriculture are taken into account. Welfare effects are also considered.