The Equilibrium Effects of Urban Air Quality Policies: Evidence from the Grand Paris Low-Emission Zone

Eva Gossiaux and Mohamed Bahlali
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Eva Gossiaux: Paris School of Economics
Mohamed Bahlali: Aix Marseille Univ, CNRS, AMSE, Marseille, France

No 2614, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: Urban low-emission zones (LEZs) are increasingly used to reduce transportrelated air pollution, yet little is known about their long-run general equilibrium effects on the urban spatial structure and their implications in term of pollution exposure. To explore this question, we develop a quantitative spatial equilibrium model with endogenous commuting, transport mode choice and air pollution generated by transport, housing and firms activity. Pollution dispersion is described by an advection-diffusion equation accounting for atmospheric diffusion, deposition, and wind. We apply the model to the Grand Paris Low-Emission Zone and evaluate a long-run counterfactual in which internal combustion engine vehicles are banned from commuting within or through the regulated area. The results show that the policy substantially reduces car use and transport-related emissions. However, endogenous relocation by workers and firms partly offsets environmental gains by shifting economic activity and commuting flows toward more car-dependent peripheral areas, while simultaneously attenuating welfare losses. As a result, partial-equilibrium approaches that abstract from spatial reorganization tend to overestimate both the environmental benefits and welfare costs of the LEZ policy.

Keywords: General equilibrium effects; Low-emission zones; Air pollution; Transport policies; Quantitative spatial equilibrium (search for similar items in EconPapers)
JEL-codes: Q52 Q53 R13 R41 (search for similar items in EconPapers)
Date: 2026-05-31
Note: Working paper AMSE 2026-14
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