Spatial Policies and Land Use Patterns: Optimal and Market Allocations

44 Pages Posted: 11 Feb 2014

See all articles by Efthymia Kyriakopoulou

Efthymia Kyriakopoulou

University of Gothenburg ; Beijer Institute of Ecological Economics

Anastasios Xepapadeas

Athens University of Economics and Business; University of Bologna - School of Economics, Management, and Statistics

Date Written: February 10, 2014

Abstract

We study the optimal and equilibrium distribution of industrial and residential land in a given region. The trade-off between the agglomeration and dispersion forces, in the form of pollution from stationary forces, environmental policy, production externalities, and commuting costs, determines the emergence of industrial and residential clusters across space. In this context, we define two kinds of spatial policies that can be used in order to close the gap between optimal and market allocations. More specifically, we show that the joint implementation of a site-specific environmental tax and a site-specific labor subsidy can reproduce the optimum as an equilibrium outcome. We also propose a novel approach that allows for endogenous determination of land use patterns and provides more precise results compared to previous studies.

Keywords: Spatial Policies, Agglomeration, Land Use, Pollution, Environmental Tax, Labor Subsidy

JEL Classification: R14, R38, H23

Suggested Citation

Kyriakopoulou, Efthymia and Xepapadeas, Anastasios, Spatial Policies and Land Use Patterns: Optimal and Market Allocations (February 10, 2014). FEEM Working Paper No. 8.2014. Available at SSRN: https://ssrn.com/abstract=2393324 or http://dx.doi.org/10.2139/ssrn.2393324

Efthymia Kyriakopoulou (Contact Author)

University of Gothenburg ( email )

Vasagatan 1
P.O. Box 640
Gothenburg, 405 30
Sweden
46 (0)31 786 2641 (Phone)

HOME PAGE: http://economics.handels.gu.se/english/staff/senior_lecturers-lecturers-_researchers/efthymia-kyriak

Beijer Institute of Ecological Economics ( email )

Stockholm
United States

Anastasios Xepapadeas

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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