This book is concerned with dynamic relations between interregional division of labor, division of consumption and determination of prices structure within a perfectly competitive framework in spatial economy. Our analytical framework examines the issues related to interregional dynamics raised in the traditional regional economic theories as well as to provide insights into the issues related to interdependence between knowledge creation and utilization and spatial economies examined by the new international trade theory and new regional economic theory. The comparative advantage of our theory is that in providing rich insights into complex of regional evolution it uses only a few concepts and simplified functional forms and accepts a few assumptions about behavior of consumers, producers and institutional structures over space.