CESifo Working Paper: Resources and Environment 4044
We analyze the efficiency of urbanization patterns in a stylized dynamic model of urban growth with three sectors of production. Pollution, as a force that discourages agglomeration, is caused by domestic production. We show that cities are too large and too few in number in uncoordinated equilibrium if economic growth implies increasing pollution ('brown growth'). If, however, production becomes cleaner over time ('green growth') the equilibrium urbanization path reaches the efficient urbanization path after finite time without need of a coordinating mechanism. The results may be generalized to take other forms of congestion into account.
urbanization green growth migration pollution congestion