The most important question of regional economics is: What are the reasons for the existence, the growth, and the changes of regional economic structures? Without any doubt, agglomerations which are not based on natural sources belong to the most significant regional structures. The New Economic Geography gives answers – based on a microeconomic total model with different regions and industrial sectors, with heterogeneous goods and different transport costs – to the questions with regard to the reasons of the existence of agglomerations. This book pursues three objectives: First of all, the new paradigm is connected with the historical background of the traditional regional economics and trade theory. Furthermore, the basic model is described in detail and then discussed from a critical point of view. Finally, some possible extensions are introduced, which make it possible to eliminate some criticized elements of the basic model.