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Brown Growth, Green Growth, and the Efficiency of Urbanization

  • Martin F. Quaas
  • Sjak Smulders

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.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2012/wp-cesifo-2012-12/cesifo1_wp4044.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4044.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_4044
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  1. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
  2. Grossman, Gene M & Krueger, Alan B, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 353-77, May.
  3. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
  4. Hannes Egli & Thomas M. Steger, 2004. "A Dynamic Model of the Environmental Kuznets Curve : Turning Point and Public Poliy," CER-ETH Economics working paper series 04/33, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich, revised May 2005.
  5. Gaigné, Carl & Riou, Stéphane & Thisse, Jacques-François, 2012. "Are compact cities environmentally friendly?," Journal of Urban Economics, Elsevier, vol. 72(2), pages 123-136.
  6. Stern, David I., 2004. "The Rise and Fall of the Environmental Kuznets Curve," World Development, Elsevier, vol. 32(8), pages 1419-1439, August.
  7. Anas, Alex & Xiong, Kai, 2005. "The formation and growth of specialized cities: efficiency without developers or Malthusian traps," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 445-470, July.
  8. Nicholas Z. Muller & Robert Mendelsohn, 2009. "Efficient Pollution Regulation: Getting the Prices Right," American Economic Review, American Economic Association, vol. 99(5), pages 1714-39, December.
  9. Andreoni, James & Levinson, Arik, 2001. "The simple analytics of the environmental Kuznets curve," Journal of Public Economics, Elsevier, vol. 80(2), pages 269-286, May.
  10. Esteban Rossi-Hansberg & Mark L. J. Wright, 2006. "Urban structure and growth," Staff Report 381, Federal Reserve Bank of Minneapolis.
  11. Robert W. Helsley & William C. Strange, 1997. "Limited Developers," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 329-48, May.
  12. Henderson, J. V., 1977. "Externalities in a spatial context : The case of air pollution," Journal of Public Economics, Elsevier, vol. 7(1), pages 89-110, February.
  13. Vernon Henderson & Anthony Venables, 2009. "Dynamics of city formation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(2), pages 233-254, April.
  14. Lieb, Christoph M., 2002. "The environmental Kuznets curve and satiation: a simple static model," Environment and Development Economics, Cambridge University Press, vol. 7(03), pages 429-448, July.
  15. Duncan Black & Vernon Henderson, 1999. "A Theory of Urban Growth," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 252-284, April.
  16. Vernon Henderson, 2002. "Urbanization in Developing Countries," World Bank Research Observer, World Bank Group, vol. 17(1), pages 89-112.
  17. Henderson, Vernon, 2002. "Urban primacy, external costs, and quality of life," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 95-106, February.
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