The paper examines how regional integration affects the spatial distribution of industries and income. It shows that when trade costs are high, industries are spread across regions to meet consumer demand. As trade costs decrease, industries tend to cluster due to increasing returns, migration, and input-output linkages. However, if workers do not move between regions, lower trade costs can lead to industry spreading again, as firms become sensitive to cost differences. The paper highlights that without interregional migration, the relationship between integration and agglomeration is non-monotonic. Initially, lower trade costs encourage agglomeration, but further reductions can lead to dispersion. The analysis also shows that without migration, agglomeration can create wage differences, which may hinder convergence. The study uses a model with two regions and considers both scenarios with and without labor mobility. It finds that when labor can move freely, agglomeration is more likely, and wage differences are reduced. However, without labor mobility, agglomeration can lead to wage disparities, and industry may spread again at low trade costs. The paper emphasizes the importance of labor mobility in determining the spatial distribution of industries and income. It also notes that the results depend on assumptions about labor mobility and the flexibility of wages in response to industrial changes. Overall, the paper suggests that regional integration can lead to both convergence and divergence in income and industry distribution, depending on the presence of labor mobility.The paper examines how regional integration affects the spatial distribution of industries and income. It shows that when trade costs are high, industries are spread across regions to meet consumer demand. As trade costs decrease, industries tend to cluster due to increasing returns, migration, and input-output linkages. However, if workers do not move between regions, lower trade costs can lead to industry spreading again, as firms become sensitive to cost differences. The paper highlights that without interregional migration, the relationship between integration and agglomeration is non-monotonic. Initially, lower trade costs encourage agglomeration, but further reductions can lead to dispersion. The analysis also shows that without migration, agglomeration can create wage differences, which may hinder convergence. The study uses a model with two regions and considers both scenarios with and without labor mobility. It finds that when labor can move freely, agglomeration is more likely, and wage differences are reduced. However, without labor mobility, agglomeration can lead to wage disparities, and industry may spread again at low trade costs. The paper emphasizes the importance of labor mobility in determining the spatial distribution of industries and income. It also notes that the results depend on assumptions about labor mobility and the flexibility of wages in response to industrial changes. Overall, the paper suggests that regional integration can lead to both convergence and divergence in income and industry distribution, depending on the presence of labor mobility.