Mechanics of NEG is based on a number of fundamental elements that provide a plausible
theorization of why self-reinforcing centripetal forces that pull economic activity into a location
occur and persist over time. More particularly, increasing returns to scale, monopolistic competition,
transaction costs and the occurrence of external economies collectively underpin the general
functioning of NEG models and thus shape firms’ and workers’ location behaviour. As a result, the
combination of such theoretical tools and the occurrence of specific parameters values in the
economies modelled by NEG make it possible to explain the geographical unevenness of the
economic landscape as a situation of equilibrium