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Decentralized Pollution Standard Setting with Agglomeration Forces Present in a Model of Specific Firm Mobility

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  • Mitch Kunce

Abstract

Herein we augment the traditional devolved environmental interjurisdictional-competition model with specific firm mobility in the presence of agglomeration economies. Now the number of firms in a jurisdiction becomes pertinent in the story of decentralized efficiency. Specifically, when agglomeration forces are sufficiently strong, firm movement is subdued. Placed-based environmental policies aimed at swaying a firm's location decision are rendered relatively ineffective. As a result, jurisdictions possess incentives to excessively overprotect environmental quality − a race-to-the-top. Firm taxation effects on devolved efficiency are also examined.  JEL classification numbers: Q51, Q58, R38.

Suggested Citation

  • Mitch Kunce, 2023. "Decentralized Pollution Standard Setting with Agglomeration Forces Present in a Model of Specific Firm Mobility," Business & Entrepreneurship Journal, SCIENPRESS Ltd, vol. 12(1), pages 1-3.
    • Handle: RePEc:spt:busent:v:12:y:2023:i:1:f:12_1_3
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    References listed on IDEAS

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    More about this item

    Keywords

    Decentralized environmental regulation; Agglomeration economies; Firm location.;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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