The impact of pollution on the dynamics of industry location and residence choice

Pasquale Commendatore, I. Kubin, M. Sodini and I. Sushko
Additional contact information
I. Kubin: Vienna University of Economics and Business WU
M. Sodini: University of Naples ‘Federico II’
I. Sushko: Institute of Mathematics, NASU, and Kyiv School of Economics

Annals of Operations Research, 2024, vol. 337, issue 3, No 2, 739-768

Abstract: Abstract In this paper we analyze the role of pollution for industry location and residence choice. We present a new economic geography (NEG) model in which manufacturing generates local pollution (that does not accumulate) and uses two types of labour input: unskilled workers that cannot migrate and work where they live; and high-skilled entrepreneurs that choose where to produce and where to live. Taking on board costless commuting or, in alternative, distance working, entrepreneurs can live in a different location from production. Both types of households enjoy utility from consuming all commodities (locally and imported variants) and suffer from local pollution. The resulting model is of the footloose entrepreneur variant, but involves two dynamic equations: the standard one governing the residential choice of entrepreneurs, and another one governing where production is located. The current paper analyses the discrete time dynamic process defined by a two-dimensional piecewise smooth map. Depending on parameters this map can have possibly coexisting attractors of various types (fixed points, cycles, closed curves as well as chaotic attractors). We analytically obtain stability conditions for the fixed points. Using numerical methods we describe also some global dynamic properties of the considered map. Finally, we propose an economic interpretation of the results concerning local stability analysis and global dynamics.

Keywords: New economic geography; Environmental pollution; Industry location; Residence choice; Bifurcation analysis; Complex dynamics (search for similar items in EconPapers)
JEL-codes: C62 D43 F12 F2 Q50 R30 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-023-05568-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:337:y:2024:i:3:d:10.1007_s10479-023-05568-z

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-023-05568-z

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().