2008 volume 40(4) pages 928 – 947
doi:10.1068/a38434

Cite as:
Verhoef E, Nijkamp P, 2008, "Urban environmental externalities, agglomeration forces, and the technological ‘deus ex machina’" Environment and Planning A 40(4) 928 – 947
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Urban environmental externalities, agglomeration forces, and the technological ‘deus ex machina’

Erik Verhoef, Peter Nijkamp

Received 24 October 2005; in revised form 15 June 2006; published online 11 February 2008

Abstract. The aim of this paper is to analyze and depict urban equilibrium from the perspective of a complex force field between (positive) agglomeration economies and (negative) environmental externalities. Based on a simplified representation of a linear urban economy, a general-equilibrium model is designed and its properties are investigated by using numerical simulations. The model includes a spacious industrial centre, in which agglomeration externalities are differentiated over space, and a residential area that suffers from pollution, which is also differentiated over space. For the sake of simplicity urban environmental externalities are analyzed as being proportional to fossil fuel use, so that energy taxes would be a logical instrument. Environmental technology choice by firms is used as a tool for coping with environmental externalities, and is endogenized. Using this model we are able to generate interesting and sometimes surprising results for the city under consideration.

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