Spatial Distribution of Economic Activities and Transboundary Pollution

Mardi | 2013-12-17
Sully 5

Julien CIUCCI – Marie-Antoinette MAUPERTUIS – Dominique PRUNETTI

Di¤erent empirical studies con…rm that individuals consider environmental quality in their location choices. Nonetheless, little attention has been devoted to the role of transboundary pollution in the agglomeration or spreading of economic activities. This contribution introduces transboundary pollution in the …eld of New Economic Geography providing an extension of Ottaviano’s Core-Periphery Model (Ottaviano, 2001). In terms of long run equilibria, the introduction of pollution to the footloose entrepreneur model has two major consequences. First, it allows several original equilibrium con…gurations, which do not arise by considering only transport costs. Secondly, for a given level of transport cost, di¤erent equilibrium con…gurations may occur, depending on the environmental parameters.