| There are so many scholars paying attention to industrial agglomeration in that it is one performance of optimal. In China, the policy of reform and opening in 1980 s has accelerated the flows of the factors of production around different spaces. Many new industry cluster appeared in this country and some regional industry clusters were going to decentralization. However, industrial agglomeration is a "double-edged sword". Not only can it brings positive overflowing benefit reducing the production cost, but it also brings negative effect like environmental pollution. In order to limit environmental pollution the government formulate environmental regulation in the process of industrial agglomeration, which plays a special role as one mean of intervening on the enterprise production activities by implementing laws ang regulations of environmental protection. Obviously, environmental regulation will affect the flows of the factors of production around different spaces and then affect the spatial distribution of industry. Nevertheless, existing studies on the factors affecting industrial agglomeration focus on empirical investigations. The problem is a lack of depth analysis of the theoretical level.New economic geography theory puts the space factor, which is long neglected by mainstream economics, into the economic model to analysis the regulation of industrial space distribution. It provides a good basic research framework to study the change of industry agglomeration under environmental regulation. This paper introduces variables of environmental regulation based on the FE model of new economic geography. It uses mathematical language to deal with the balance of agglomeration and dispersion forces. And the paper concludes how the freedom degree of trade and the environmental regulation influence the stability of the equilibrium in the long-term equilibrium. The conclusion can be used to explain industry agglomeration under different environmental regulation with different transaction in reality. Through the analysis of the paper we can get some characteristic of regional industry agglomeration:(1) The environmental regulation difference makes the relocationof the share of expenditure need a larger share of production transfer;(2) The environmental regulation difference can weaken the effect of the local market and the effect of the price index;(3) The environmental regulation difference leads to asymmetric industry distribution, and with the increase of the freedom degree of trade there are industry agglomerations happened;(4) As a result of the existence of environmental regulation difference, the mode of industry agglomeration is divided into abrupt change and continuous change;(5) The sticky problem of relocation. According to this paper, we can conclude that when the government wants to get economic benefits from industry agglomeration, it needs to make environmental regulation matching with the current environmental condition and industrial distribution. Also the government needs to strengthen international communication and cooperation. In order to promote industry agglomeration the government should lead the industry towards a cleaner economy by driving green innovation. |
