A Spatial Equilibrium Analysis of Air Pollution in China

Authors :: Yamada, Eiji
Source :: Working Paper. (211):1-82
Publication Year :: 2020
Publisher :: JICA Research Institute, 2020.
Abstract: Weconstructaspatialequilibriummodelwithendogenousairpollutionasaby-productof production andconsumption,wherespatiallymobileskilledandunskilledworkersareaffected negativelybutheterogeneouslybyairpollution.Usingacalibratedversionofthemodelbased on dataforChinain2010,weshowthatstrictregulationcanbea centripetal forcethatattracts workersandproductiontowardtheregulatedplace,whilereducingthelocalandoverallemission of pollutants.Thisresultisincontrasttotheinsightsoftraditionaltheoriesthatseeenviron- mental regulationasa centrifugal forceforthelocaleconomy.Themigrationofworkerswho care environmentalquality,input-outputlinkagesindomestictradenetworks,andopennessto internationaltrade,workinthemechanismdeliveringthisresult.Wethenconsiderahypothetical policy toreducenationalindustrialemissionby10percentandcomparestrategiesonhowto allocate reductionresponsibilitiesacrosscities.Wefindthatconcentratingresponsibilityina limited numberofrichcitiesmayoutperformamoreequalallocationintermsofwelfareand economic output.