2006 Volume 12 Issue 2 Pages 85-91
The welfare effects of nuisance zoning on residents and landowners are analyzed by explicitly incorporating the nuisance externality from industry sector to residence. The numerical simulation based on a simplified linear city model shows that nuisance zoning generally causes a trade-off between the welfare of residents and landowners. Such a trade-off always emerges in the presence of large agglomeration economies, where stricter zoning is more favorable to residents.