At the heart of Giersch's new economic geography was what he called the "Schumpeter volcano," a center of innovation in a specific location, which would provide the innovating company or business unit with a temporary monopoly. Once the innovation "lava" flowed downward and cooled, competitive advantage was lost. The volcano thus must continue producing new innovations (new technologies) or move to the margins in the process of locational competition (Standortwettbewerb). While established "volcanoes" can maintain their position due to incumbency effects, the framework allows for imitation and the possibility of new centers to emerge and successfully compete with existing firms, business units, and regions.

Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, loc. 297