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Are compact cities environmentally friendly?

Author

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  • GAIGNE, Carl
  • RIOU, Stéphane
  • THISSE, Jacques François

Abstract

There is a wide consensus among international institutions and national governments in favor of compact (i.e. densely populated) cities as a way to improve the ecological performance of the transport system. Indeed, when both the intercity and intra-urban distributions of activities are given, a higher population density makes cities more environmentally friendly because the average commuting length is reduced. However, when we account for the possible relocation of activities within and between cities in response to a higher population density, the latter may cease to hold. Indeed, an increasing-density policy affects prices, wages and land rents, which in turn incentivizes firms and households to change place. This reshapes the urban system in a way that may generate a higher level of pollution. Thus, although an increase in compactness is environmentally desirable when locations are given, compactness may not environmentally- friendly when one accounts for the general equilibrium effects generated by such a policy.
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Suggested Citation

  • GAIGNE, Carl & RIOU, Stéphane & THISSE, Jacques François, 2012. "Are compact cities environmentally friendly?," CORE Discussion Papers RP 2404, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:2404 Note: In : Journal of Urban Economics, 72(2-3), 123-136, 2012
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    File URL: http://dx.doi.org/10.1016/j.jue.2012.04.001
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • 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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