| Authors |
Kyriakopoulou, E. and Xepapadeas, A. |
| Title |
Environmental Policy, Spatial Spillovers and the Emergence of Economic Agglomerations |
| Abstract |
We explain the spatial concentration of economic activity, in a model of economic geography,
when the cost of environmental policy - which is increasing in the concentration
of pollution - and an immobile production factor act as centrifugal forces, while positive
knowledge spillovers and iceberg transportation costs act as centripetal forces. We
study the agglomeration e ects caused by trade-o s between centripetal and centrifugal
forces. The above e ects govern rms� location decisions and, as a result, they de ne the
distribution of economic activity across space. We derive the rational expectations equilibrium,
which results either in a monocentric or in a polycentric city, and the regulator�s
optimum, which results in a bicentric city. We compare the outcomes and characterize
the optimal spatial policies. |
| Keywords |
Agglomeration, Space, Pollution, Environmental Policy, Knowledge Spillovers, Transportation Cost |
| Classification JEL |
R38, Q58 |
| File |
Environmental_Policy_Spatial_Spillovers.pdf (403046 bytes) |
| File-Function |
First version |
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Copyright © 2009 [D.I.E.S.S. A.U.E.B.]. All rights reserved.
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