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Capital Heterogeneity, Industrial Clusters and Environmental Consciousness

Author

Listed:
  • Karkalakos, Sotiris

    (Keele University)

Abstract

It is shown in the context of a new economic geography that when capital is heterogeneous - degree of environmental sensitivity - 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.

Suggested Citation

  • Karkalakos, Sotiris, 2010. "Capital Heterogeneity, Industrial Clusters and Environmental Consciousness," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 353-375.
    • Handle: RePEc:ris:integr:0508
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    Citations

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    Cited by:

    1. Liu, Yazhou & Ren, Tiantian & Liu, Lijun & Ni, Jinlan & Yin, Yingkai, 2023. "Heterogeneous industrial agglomeration, technological innovation and haze pollution," China Economic Review, Elsevier, vol. 77(C).
    2. Gao, Kang & Yuan, Yijun, 2021. "The effect of innovation-driven development on pollution reduction: Empirical evidence from a quasi-natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 172(C).
    3. Jingkun Zhou & Juan Tian & Diandian Zhang, 2023. "Pollution Effect of the Agglomeration of Thermal Power and Other Air Pollution-Intensive Industries in China," IJERPH, MDPI, vol. 20(2), pages 1-17, January.
    4. Binkai Xu & Yanming Sun, 2023. "The Impact of Industrial Agglomeration on Urban Land Green Use Efficiency and Its Spatio-Temporal Pattern: Evidence from 283 Cities in China," Land, MDPI, vol. 12(4), pages 1-19, April.

    More about this item

    Keywords

    Agglomeration; Pollution; Matching;
    All these keywords.

    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, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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