There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.

A SUMMARY IS PRESENTED OF THEORETICAL ANALYSIS DEVELOPED TO EXAMINE THE STRUCTURE OF FACTOR PRICES AND COSTS WITHIN A CORE-DOMINATED CITY. THIS ANALYSIS HIGHLIGHTS THE EFFECTS OF CERTAIN TECHNOLOGICAL LAGS AND TRANSPORT COST RELATIONSHIPS. THE DECENTRALIZATION OR SUBURBANIZATION OF ECONOMIC ACTIVITY IN MAJOR METROPOLITAN AREAS IS A FAMILIAR PHENOMENON. A MODEL DESCRIBING THE ECONOMIC ACTIVITY WITHIN THESE METROPOLITAN AREAS, ASSIGNS TO THE AUTOMOBILE A MORE MODEST ROLE IN THE SUBURBANIZATION OF METROPOLITAN ACTIVITY THAN IS FOUND IN MOST STUDIES. RESULTS ARE PRESENTED OF TWO EMPIRICAL ANALYSES OF THE MANUFACTURING SECTOR IN THE PARTICULAR CORE-DOMINATED CITY OF CHICAGO. THE ANALYSIS OF LOCATION IS MADE FOR THIS SECTOR SINCE MANUFACTURING IS THE LARGEST EMPLOYER IN MANY OF THESE METROPOLITAN AREAS AND HAS HAD THE LARGEST CENTRAL CITY DECLINE IN EMPLOYMENT.