 Environmental policy, first nature advantage and the emergence of economic clustersEfthymia Kyriakopoulou () and Anastasios Xepapadeas Regional Science and Urban Economics, 2013, vol. 43, issue 1, 101-116 Abstract: We explain the spatial concentration of economic activity 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 effects caused by trade-offs between centripetal and centrifugal forces which eventually determine the distribution of economic activity across space. The equilibrium solution 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. In general, our results suggest that sites with inherent advantages can lose their comparative advantage when social costs at these spatial points are taken into account. Keywords: Agglomeration; Space; Environmental policy; Natural cost advantage; Knowledge spillovers; Monocentric–bicentric city (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:43:y:2013:i:1:p:101-116 DOI: 10.1016/j.regsciurbeco.2012.05.006 Access Statistics for this article Regional Science and Urban Economics is currently edited by D.P McMillen and Y. Zenou More articles in Regional Science and Urban Economics from Elsevier |
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