The issue of the possible adverse effects of a reduction in pollution on the economy is a very real one for China, given its public commitment to substantial cuts in CO2 emissions by 2020. An important part of this issue is the regional dimension - the pollution reduction is likely to have...

This paper demonstrates that a pollution tax with a fixed cost component may lead, by itself, to segregation between clean and dirty firms without heterogeneous preferences or increasing returns. We construct a simple model with two locations and two industries (clean and dirty) where pollution...

This paper presents the first investigation of the effects of optimal energy taxation in an urban spatial setting. Rather than exploring the effects of a carbon tax, our approach is to derive the supplements to existing taxes that are needed to support the social optimum. We then analyze the...

This paper studies the interaction of environmental policy and green preferences under potential firm relocation. A green firm and a brown firm choose the environ- mental quality of their products. Both an emission tax and consumers' willingness to pay for green products encourage investment in...