Do agglomeration economies are lower for polluting sectors?

Emmanuelle Leturque () and Mathieu Sanch-Maritan ()
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Emmanuelle Leturque: LEDi - Laboratoire d'Economie de Dijon - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique
Mathieu Sanch-Maritan: CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université

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Abstract: This article explore how the relation between productivity and local city-size can be mitigated by pollution. More specifically, we estimate agglomeration economies considering a new source of heterogeneity among industries: the degree of pollution. Due to pollution perception acting as a dispersion force, we expect net agglomeration economies to be lower for polluting firms. In fact, polluting firms may anticipate that households and other firms are reluctant to locate near sources of pollution. In this paper, we exploit spatial data on sectoral emissions for a large number of air pollutants. We define a continuous variable of pollution that varies across sectors and employment zones. Our finding are twofold. First we find that agglomeration economies are lower for polluting sectors. Second we find that negative agglomeration are observed for some key pollutant such as carbon dioxide, nitrogen dioxide, lead or sulfur dioxide.

Keywords: Agglomeration economies; Polluting sectors; Negative externalities (search for similar items in EconPapers)
Date: 2019-11-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-sbm, nep-tid and nep-ure
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