What is the relationship between Dale and Esgaroth/Laketown?

Question

Dale sat on the threshold of the Dwarven kingdom of Erebor, while Esgaroth/Lake-town was located a bit further south, on the lake.

In the movies, I haven't read the books yet, both are described as centers of commerce and rich towns profiting from the riches mined by the Dwarves and pouring out of the mountain, until Smaug came and put an end to that.

Dale is destroyed and abandoned, and Esgaroth/Lake-town becomes a shadow of its former glory.

Both towns seem to be very close together, and it feels strange to have two commerce towns side by side and both profiting from the same source of wealth.

What is the relation between both towns? Were they partners in commerce before Smaug? Or was Esgaroth/Laketown founded by survivors fleeing Dale when Smaug destroyed it (which would seem unwise)?

Answer 1

Most of the history of Esgaroth is unknown, but there is this passage from The Hobbit, as Bilbo comes into sight of Lake-town ("A Warm Welcome"):

They still throve on the trade that came up the great river from the South and was carted past the falls to their town; but in the great days of old, when Dale in the North was rich and prosperous, they had been wealthy and powerful, and there had been fleets of boats on the waters, and some were filled with gold and some with warriors in armour, and there had been wars and deeds which were now only a legend. The rotting piles of a greater town could still be seen along the shores when the waters sank in a drought.

In The Annotated Hobbit, it is noted that Tolkien never provided any other information about the ruined "greater town." It may have been an earlier version of Esgaroth, or there may have been two towns on the Long Lake in former days.

However, we do know that Esgaroth was sufficiently far from Dale (about three days of travel, partway by boat and partway riding, in The Hobbit) that they could certainly have separate economic bases. While Dale seems to have existed predominantly to trade with the dwarves of Erebor, Lake-town was a more general trading center. The Long Lake lay at the confluence of the Running River and the Forest River, and there was presumably a long history of trade between the Lake-men and the elves of Mirkwood.