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Do agglomeration economies are lower for polluting sectors?

Author

Listed:
  • Emmanuelle Leturque

    (LEDi - Laboratoire d'Economie de Dijon - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

  • Mathieu Sanch-Maritan

    (CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université)

Abstract

This article explore how the relation between productivity and local city-size can be mitigated by pollution. More specifically, we estimate agglomeration economies considering a new source of heterogeneity among industries: the degree of pollution. Due to pollution perception acting as a dispersion force, we expect net agglomeration economies to be lower for polluting firms. In fact, polluting firms may anticipate that households and other firms are reluctant to locate near sources of pollution. In this paper, we exploit spatial data on sectoral emissions for a large number of air pollutants. We define a continuous variable of pollution that varies across sectors and employment zones. Our finding are twofold. First we find that agglomeration economies are lower for polluting sectors. Second we find that negative agglomeration are observed for some key pollutant such as carbon dioxide, nitrogen dioxide, lead or sulfur dioxide.

Suggested Citation

  • Emmanuelle Leturque & Mathieu Sanch-Maritan, 2019. "Do agglomeration economies are lower for polluting sectors?," Working Papers hal-02347595, HAL.
    • Handle: RePEc:hal:wpaper:hal-02347595
    Note: View the original document on HAL open archive server: https://hal.science/hal-02347595
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    Keywords

    Agglomeration economies; Polluting sectors; Negative externalities;
    All these keywords.

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