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Economic Geography and the Effect of Environmental Pollution on Agglomeration

  • Lange Andreas

    ()

    (University of Maryland)

  • Quaas Martin F

    ()

    (UFZ Helmholtz Centre for Environmental Research)

We study how local environmental pollution affects spatial patterns of economic activities when workers can migrate. Based on a New Economic Geography model, we analytically characterize the stability conditions for three different types of equilibria: symmetric spreading, partial and full agglomeration. We show that the extent of agglomeration crucially depends on the damages caused by local pollution. We thereby provide a unified framework for discussing different relationships between the extent of agglomeration and trade freeness that have been found in the literature.

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File URL: http://www.degruyter.com/view/j/bejeap.2007.7.1/bejeap.2007.7.1.1724/bejeap.2007.7.1.1724.xml?format=INT
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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 7 (2007)
Issue (Month): 1 (October)
Pages: 1-33

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Handle: RePEc:bpj:bejeap:v:7:y:2007:i:1:n:52
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