Environmental policy, spatial spillovers and the emergence of economic agglomerations

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 70.2009

Classification and Topics

• Classification: Wirtschaft
• Subject: Agglomeration ; Spatial Economics ; Environmental Policy ; Knowledge Spillovers ; Transportation Cost

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kyriakopoulou, Efthymia ; Xepapadeas, Anastasios
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/53270
• Last update: 10.03.2025, 11:41 AM CET