This article explores and develops three ideas: (a) that the aridity of western North America and its attendant characteristics have fundamentally shaped the work of western agricultural economists and encouraged some distinctive western contributions to the study of economics; (b) that in order to understand economic relationships that are critical to rural western economic development, economists need to move beyond the standard equilibrium economic models and explore some emerging models of spatial development and institutional change in which the concept of "increasing returns" plays a key role; and (c) that the West provides a fine laboratory for testing these frameworks.