Transportation can be a factor of specialization permitting locations to focus on activities for which they are the most productive. In the above figure, five locations are linked by a transportation network composed of one hub and four feeders. Without trade, each location has to produce the goods it requires. It is a form of diversification, albeit a relatively unproductive one. In this case, the hub is simply a location similar to the others but potentially better connected.
With trade, a process of geographical specialization becomes possible. Each peripheral location can specialize in producing one good and import what is not produced locally. The hub can specialize in trading goods produced in the four feeder locations and acts as a commercial center. In addition to being a factor of specialization, transportation can be a factor of concentration.