Econ of Etalk and Cities

Robin Hanson (
Thu, 5 Sep 96 13:00:50 PDT

Here is a rare find - an economic analysis of the effect of a rising
technology. Electronic communication may well encourage the
concentration of people into cities, contrary to many expectations.

"Information Technology and the Future of Cities"

Stanford University
Harvard University and NBER

Paper ID: NBER Working Paper 5562
Date: May 1996

Contact: Edward L. Glaeser
Postal: Department of Economics, Harvard University,
Cambridge, MA 02138
Phone: (617) 495-0575
Fax: Not Available

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the address above.

Will improvements in information technology eliminate face-
to-face interactions and make cities obsolete? In this paper,
we present a model where individuals make contacts and choose
whether to use electronic or face-to-face meetings in their
interactions. Cities are modeled as a means of reducing the
fixed travel costs involved in face-to-face interactions.
When telecommunications technology improves, there are two
opposing effects on cities and face-to-face interactions:
some relationships that used to be face-to-face will be done
electronically (an intuitive substitution effect), and some
individuals will choose to make more contacts, many of which
result in face-to-face interactions. Our empirical work
suggests that telecommunications may be a complement or at
least not a strong substitute for cities and face-to-face
interactions. We also present simple models of learning in
person, from a written source or over the phone and find that
interactive communication dominates other forms of learning
when ideas are complicated.

JEL Classification: O33