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Title:Environmental policy, spatial spillovers and the emergence of economic agglomerations PDF Logo
Authors:Kyriakopoulou, Efthymia
Xepapadeas, Anastasios
Issue Date:2009
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 70.2009
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.
Subjects:Agglomeration
Spatial Economics
Environmental Policy
Knowledge Spillovers
Transportation Cost
JEL:R3
Q5
H2
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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