Yes you are largely correct - our knowledge of how markets work in all scenarios and edge cases is incomplete, which is why these are active areas of research b

Yes you are largely correct - our knowledge of how markets work in all scenarios and edge cases is incomplete, which is why these are active areas of research by economists, but there is plenty of research on the effects of those non-free market behaviors. As you might imagine it is generally not good. I also don't think any economist fails to acknowledge that there may be multiple minima/maxima in a market. Hotelling law as we know today is an observation of an optimal game theory result - it actually does bring maximal payoff for the participants at equilibrium. If you want to change the equilibrium condition to say - minimize transportation and energy costs, you will likely have to change part of the rules of the game via policy/zoning/etc. The "market forces" you speak of is simply the aggregate actions and result of people looking maximize their efforts. Embracing of market forces does not mean taking an ultra-capitalist-libertarian-laissez-faire view on economics. Instead it is acknowledging that the participants in the game will always seek to maximize their payoffs given a set of rules. Naively discounting these "market forces" to act in this way and find unintended optimal solutions is where problematic outcomes occur by shortsighted policy makers. It is by NOT embracing the effect of market forces is where trouble arises.