Defects　of　linear　and　circular　models　on　industry　agglomeration　have　been　illustrated　in　this　paper,　with　the　conclusion　that　the　defects　lie　in　the　improper　prerequisite　of　the　models,　which　will　lead　to　false　identification　of　the　fundamental　impetus　of　the　phenomenon.　A　dynamic　evolution　model　on　industry　agglomeration　based　on　swarm　intelligence　is　set　up,　followed　with　relevant　computer　simulation,　leading　to　the　finding　that　the　accumulation　and　diffusion　of　knowledge　is　the　prime　motivation　of　industry　agglomeration.