Spatial Policies and Land Use Patterns: Optimal and Market Allocations

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.


Issue Date:
2014-01
Publication Type:
Working or Discussion Paper
Record Identifier:
http://ageconsearch.umn.edu/record/163617
PURL Identifier:
http://purl.umn.edu/163617
Total Pages:
44
JEL Codes:
R14; R38; H23
Series Statement:
CCSD
8.2014




 Record created 2017-04-01, last modified 2018-01-22

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