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"Information Technology and the Future of Cities"
BY: JESS GASPAR
Stanford University
EDWARD L. GLAESER
Harvard University and NBER
Paper ID: NBER Working Paper 5562
Date: May 1996
Contact: Edward L. Glaeser
E-Mail: MAILTO:eglaeser@kuznets.harvard.edu
Postal: Department of Economics, Harvard University,
Cambridge, MA 02138
Phone: (617) 495-0575
Fax: Not Available
Co-Auth: MAILTO:jgaspar@stanford.edu
ERN Ref: DEVELOP:WPS96-109
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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