Abstract
This paper analyzes the location pattern of firms and workers when there exists heterogeneity of labors which is defined by the difference of ability for production. Although previous papers have pointed out that several factors, like externalities or imperfect competition of firms, cause agglomeration of firms and labors, this paper shows agglomeration caused only by the assumption of the heterogeneity of labors. The distribution pattern in which high producitivity area and low one area are geographically separeterd is shown in this analysis.