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Trans‐boundary pollution transmission and regional agglomeration effects

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  • Moriki Hosoe
  • Tohru Naito

Abstract

. The purpose of this article is to analyse the effect of the externalities of industrial pollution on trade patterns and economic geography. Many researchers have studied the effects of agglomeration on regional systems. Krugman (1991) applied the monopolistic competition model to international trade and has thereby contributed to this category of inquiry. However, that study did not treat the agricultural sector as important. Similarly, environmental factors are ignored in most studies of that literature. Industrial agglomeration affects the productivities of other sectors via air pollution, water pollution, and so on. We introduce the environmental factor into the new economic geography model and analyse the effects of the environmental damage on the distribution between regions, and the effect of the environmental tax. After analysing the case without migration in the short run, we discuss the long run case in which households can move freely among regions. We derive the same equilibrium pattern of population distribution.

Suggested Citation

  • Moriki Hosoe & Tohru Naito, 2006. "Trans‐boundary pollution transmission and regional agglomeration effects," Papers in Regional Science, Wiley Blackwell, vol. 85(1), pages 99-120, March.
    • Handle: RePEc:bla:presci:v:85:y:2006:i:1:p:99-120
    DOI: 10.1111/j.1435-5957.2006.00062.x
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    References listed on IDEAS

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    1. Erik T. Verhoef & Peter Nijkamp, 2000. "Externalities in Urban Sustainability," Tinbergen Institute Discussion Papers 00-077/3, Tinbergen Institute.
    2. Hoel,M. & Shapiro,P., 2000. "Transboundary environmental problems with a mobile population : is there a need for central policy," Memorandum 16/2000, Oslo University, Department of Economics.
    3. Holtz-Eakin, Douglas & Lovely, Mary E., 1996. "Scale economies, returns to variety, and the productivity of public infrastructure," Regional Science and Urban Economics, Elsevier, vol. 26(2), pages 105-123, April.
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