An equilibrium model of city with atmospheric pollution dispersion

Abstract

We propose a spatial model of city coupling a labour market, a residential market, and pollution resulting from commuter traffic. The city can be of any shape. Agents choose where to work and live in order to maximize their utility, by consuming goods, residential surface and by valuing air quality. Pollution dispersion is described by a scalar transport equation, accounting for meteorological effects (diffusion, advection by wind and lessivage by rain). We prove existence of equilibria, and we propose an algorithm for computing solutions. We obtain analytical and numerical results emphasizing the combined role of economic and meteorological factors on urban air quality. We finally address welfare considerations.

Keywords: Air pollution, spatial economics, urban economics, atmospheric dispersion

JEL Classification: C61, C62, R11, R12, Q53