An equilibrium model of city with atmospheric pollution dispersion

Abstract

We propose a spatial model of city coupling a labour market, a residential market, and air pollution resulting from commuter traffic. The city can be of any shape. Agents choose where to work and live in order to maximize their utility, by consuming goods, residential surface and by valuing air quality. Pollution dispersion is described by an advection–diffusion equation. We prove existence of equilibria, and uniqueness when the number of job locations is finite. We obtain analytical and numerical results emphasizing the combined role of economic and meteorological factors on urban air quality.