Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/177158 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11354
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper develops a micro-founded city systems model with an endogenous number of cities to explore whether local governments establish the optimal city size when production processes involve environmental pollution. Our analysis delivers two key insights. First, if an optimal scheme to regulate environmental pollution is implemented, cities chosen by local governments are never too large. They are too small if pollution is purely global, but at the optimal size, if pollution is purely local. Second, if no emission scheme is implemented or if emission policies are too lax, then cities steered by local governments, become too large, however.
Subjects: 
city systems
environmental pollution
emission policies
JEL: 
H73
R12
Q50
Document Type: 
Working Paper

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