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This study aims to examine urban zoning within a linear city in a Bertrand duopolistic competition framework with price discrimination and linear transportation costs. It analyses the effects of introducing an environmental area where economic and residential activity are not allowed. The welfare function used to determine the optimal size of the green area allows for a possible regulator's bias in favour of firms/consumers. It is shown that location-price competition can be either reduced ordoi:10.18045/zbefri.2017.1.151 fatcat:fgfen3rcmncjpctxk7tmnglcwe