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: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, Institut d'Études Politiques [IEP] - Paris
Mohamed Bahlali: AMU - Aix Marseille Université, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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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: Quantitative spatial equilibrium; Transport policies; Air pollution; Low-emission zones; General equilibrium effects (search for similar items in EconPapers)
Date: 2026-06
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