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Externalities in Urban Sustainability

Author

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  • Erik T. Verhoef

    ()

  • Peter Nijkamp

    () (Vrije Universiteit Amsterdam)

Abstract

This paper studies urban sustainability from the perspective ofexternalities. We develop a general spatialequilibrium model of a monocentric city, in which two types ofexternalities occur. On the one hand, pollution inthe industrial centre leads to a spatially differentiateddeterioration of the environmental quality in the residentialarea. On the other hand, the existence of the city is explained byagglomeration economies, represented as simpleMarshallian external benefits in production. We investigate free-market versus first-best and second-best optimalspatial equilibria, and conclude that the pursuit of environmentalgoals may sometimes come at the expense ofreduced agglomeration economies, but may actually sometimes alsostimulate these economies.

Suggested Citation

  • Erik T. Verhoef & Peter Nijkamp, 2000. "Externalities in Urban Sustainability," Tinbergen Institute Discussion Papers 00-077/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20000077
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    References listed on IDEAS

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    5. Oates, Wallace E, 1983. "The Regulation of Externalities: Efficient Behavior by Sources and Victims," Public Finance = Finances publiques, , vol. 38(3), pages 362-375.
    6. Camagni, Roberto & Capello, Roberta & Nijkamp, Peter, 1998. "Towards sustainable city policy: an economy-environment technology nexus," Ecological Economics, Elsevier, vol. 24(1), pages 103-118, January.
    7. Kanemoto, Yoshitsugu, 1976. "Optimum, market and second-best land use patterns in a von Thunen city with congestion," Regional Science and Urban Economics, Elsevier, vol. 6(1), pages 23-32, March.
    8. Tauchen, Helen, 1981. "The possibility of positive rent gradients reconsidered," Journal of Urban Economics, Elsevier, vol. 9(2), pages 165-172, March.
    9. E T Verhoef, 1994. "Efficiency and Equity in Externalities: A Partial Equilibrium Analysis," Environment and Planning A, , vol. 26(3), pages 361-382, March.
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    13. Arnott, Richard, 1979. "Optimal city size in a spatial economy," Journal of Urban Economics, Elsevier, vol. 6(1), pages 65-89, January.
    14. Jeroen C.J.M. van den Bergh (ed.), 1999. "Handbook of Environmental and Resource Economics," Books, Edward Elgar Publishing, number 801.
    15. Yitzhak Oron & David Pines & Eytan Sheshinski, 1973. "Optimum vs. Equilibrium Land Use Pattern and Congestion Toll," Bell Journal of Economics, The RAND Corporation, vol. 4(2), pages 619-636, Autumn.
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    More about this item

    Keywords

    Urban equilibrium; environmental externalities; agglomeration externalities;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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