In analyzing the city as an economic institution, it seems reasonable to ask if the advantages of proximity are sufficient to assure that traders will form and maintain a market place. This process is called agglomeration. A general theorem concerning iterative spatial games is developed first. A spatial general equilibrium model comprised of a sequence of pure trade economies is proffered. Restrictions on transport technologies sufficient to assure agglomeration are determined. The possibility of a policy maker speeding the process of agglomeration is demonstrated. In conclusion, the optimality properties of the model are discussed. The research draws heavily on the works of A. Weber [8] and G. Debreu [2]. The model includes a dynamic adjustment process which is developed from individuals' maximizing behavior.