General-equilibrium models based on increasing returns, product differentiation and
monopolistic competition have attained a prominent position in trade theory and, more
recently, in economic geography. This paper surveys empirical studies on issues raised by
the new wave of theoretical thinking. There is a growing literature documenting spatial
distributions of industries at country and regional levels, which focuses predominantly on
the United States and the European Union. This body of work has produced robust findings
as well as puzzles. Particular ambiguity appears in studies of location trends in the
European Union. In addition, empirical researchers have devised methods to separate and
test alternative theoretical paradigms. Analytical work confirms the complementarity and
relevance of both neo-classical and "new" models. Existing results, however, do not permit
firm conclusions about the relative explanatory power of the main theoretical approaches
for location patterns overall and in particular industries.