Abstract

Based on outcomes of existing researches, This paper discussed capital mobility in condition of monopolistic competition and transaction costs which be decided by cost of environmental regulation, also analyzed new economic geography model of industrial transfer. After derivation and analysis of model, we find that in short term, industrial transfer of different regions is related to transaction costs due to environmental regulations, which means lower transaction costs and higher trade freedom can promote industrial transfer; While in long term, equilibrium point of industrial transfer changes with change of different initial endowment of capital and labor of two regions.

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