Environmental Policy, Spatial Spillovers and the Emergence of Economic Agglomerations

Anastasios Xepapadeas and Efthymia Kyriakopoulou ()

No 2009.70, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We explain the spatial concentration of economic activity, in a model of economic geography, when the cost of environmental policy - which is increasing in the concentration of emissions - and an immobile production factor act as centrifugal forces, while positive knowledge spillovers and iceberg transportation costs act as centripetal forces. We study the agglomeration effects caused by trade-offs between centripetal and centrifugal forces. The above effects govern firms’ location decisions and as a result, they define the distribution of economic activity across space. We derive the rational expectations equilibrium and the social optimum, compare the outcomes and characterize the optimal spatial policies.

Keywords: Agglomeration; Spatial Economics; Environmental Policy; Knowledge Spillovers; Transportation Cost (search for similar items in EconPapers)
JEL-codes: H2 Q5 R3 (search for similar items in EconPapers)
Date: 2009-09
New Economics Papers: this item is included in nep-ene, nep-env, nep-geo, nep-res and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Environmental Policy, Spatial Spillovers and the Emergence of Economic Agglomerations (2010)
Working Paper: Environmental Policy, Spatial Spillovers and the Emergence of Economic Agglomerations (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2009.70

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