Trade, industrial location and environmental consciousness

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Trade, industrial location and environmental consciousness

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Sotiris Karkalakos () (Economics, Keele University)

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Sotiris Karkalakos

Abstract

It is shown in the context of a new economic geography that, when capital is heterogeneous (a degree of environmental sensitivity), then trade liberalization may lead to industrial agglomeration and inter-regional trade. Capital heterogeneity gives local monopsony power to firms but also introduces variations in the quality of the match. Matches occur, under environmental consciousness assumption, giving rise to an agglomeration force, which can offset the forces against, trade costs and the erosion of monopsony power. A robust agglomeration equilibrium is derived analytically and shows that pollution can provide a motive for trade by spatially concentrated industries with environmental sensitivities.

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Paper provided by Centre for Economic Research, Keele University in its series Keele Economics Research Papers with number KERP 2007/15.

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Length: 19 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:kee:kerpuk:2007/15

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-01-26 (All new papers)
NEP-ENV-2008-01-26 (Environmental Economics)
NEP-GEO-2008-01-26 (Economic Geography)
NEP-INT-2008-01-26 (International Trade)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Ruthira Naraidoo & Patrick Minford & Ioannis A. Venetis, 2006. "The political economy of unemployment and threshold effects. A nonlinear time series approach," Keele Economics Research Papers KERP 2006/21, Centre for Economic Research, Keele University. [Downloadable!]
Yuan Ju & Peter Borm, 2006. "A Non-cooperative Approach to the Compensation Rules for Primeval Games," Keele Economics Research Papers KERP 2006/18, Centre for Economic Research, Keele University. [Downloadable!]
Other versions:
- Ju, Yuan & Borm, Peter, 2006. "A non-cooperative approach to the compensation rules for primeval games," Discussion Paper 97, Tilburg University, Center for Economic Research. [Downloadable!]
Cinzia Alcidi & Alessandro Flamini & Andrea Fracasso, 2005. "``Taylored'' Rules. Does One Fit All?," Keele Economics Research Papers KERP 2007/06, Centre for Economic Research, Keele University, revised Mar 2007. [Downloadable!]

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