Endogenous traffic-induced air pollution and equilibrium city structure

Citizens' increasing concern about exposure to air pollution has implications on their residential decision and therefore on the internal structure of cities, which in turn impacts on the intra-urban variation of air pollution. We analyse interdependencies of residential choice, internal city structure and air pollution by contributing an extension to the standard urban economics model with endogenous local pollution arising from passing traffic. We define the analytical conditions for the existence of equilibrium, derive equilibrium properties and perform comparative statics. We find that strong preference for air quality can lead households to move towards the urban fringe and accept higher densities on the outskirts when transport costs and background air pollution are low, resulting in non-monotonous density gradients. Households and pollution distributions vary spatially depending on the various factors shaping urban form; for instance, high background pollution concentration reduces spatial expansion, while improvements in vehicle technology foster it. We then contrast equilibrium structures resulting from the trade-offs in location choice from a health (exposure) and environmental (emissions) perspective. We further find that the processes shaping internal urban structure as well as the scale of air pollution as location choice determinant have variable spatial implications for pollution variations within cities