| Authors |
Kyriakopoulou, E. and Xepapadeas, A. |
| Title |
Environmental Policy and the Collapse of the Monocentric City |
| 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 - acts as a centrifugal force, while positive knowledge spillovers and a
site with natural cost advantage act as centripetal forces. We study the agglomeration
e ects caused by trade-o s between centripetal and centrifugal forces which eventually
determine the distribution of economic activity across space. The rational expectations
market equilibrium with spatially myopic environmental policy results either in a monocentric
or in a polycentric city with the major cluster at the natural advantage site. The
regulator�s optimum results in a bicentric city which suggests that when environmental
policy is spatially optimal, the natural advantage sites do not act as attractors of
economic activity. |
| Keywords |
Agglomeration, Space, Environmental policy, Natural cost advantage, Knowledge spillovers, Monocentric-bicentric city |
| Classification JEL |
R38, Q58 |
| File |
Environmental_Monocentric_City.pdf (398623 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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