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Spatial Policies and Land Use Patterns: Optimal and Market Allocations

Efthymia Kyriakopoulou () and Anastasios Xepapadeas ()

No 1328, DEOS Working Papers from Athens University of Economics and Business

Abstract: Environmental conditions and pollution levels have been proven to affect firms' and households' location decisions in various ways. In this paper, we study the optimal and equilibrium distribution of industrial and residential land in a given region. Industries produce a single good using land and labor and generate emissions of a pollutant, and households consume goods and residential land and dislike pollution. The trade-off between the agglomeration and dispersion forces, in the form of industrial pollution, environmental policy, production externalities, and commuting costs, determines the emergence of industrial and residential clusters across space. We also show that the joint implementation of a site-speci��c environmental tax and a site-specific labor subsidy can reproduce the optimum as an equilibrium outcome.

Keywords: Agglomeration; land use; spatial policies; pollution; environmental tax; labor subsidy (search for similar items in EconPapers)
JEL-codes: R14 R38 H23 (search for similar items in EconPapers)
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Related works:
Working Paper: Spatial Policies and Land Use Patterns: Optimal and Market Allocations (2014) Downloads
Working Paper: Spatial Policies and Land Use Patterns: Optimal and market allocations (2013) Downloads
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