Geography and the Internet: Is the Internet a Substitute or a Complement for Cities?

Todd Sinai and Joel Waldfogel

No 10028, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the tendency to connect to the Internet, and the online and offline shopping behavior of connected persons, to draw inferences about whether the Internet is a substitute or a complement for cities. We document that larger markets have more locally-targeted online content and that individuals are more likely to connect in markets with more local online content, suggesting the Internet is a complement to cities. Yet, holding local online content constant, people are less likely to connect in larger markets, indicating that the Internet is also a substitute for cities. We also find that individuals connect to overcome local isolation: notwithstanding a large digital divide, blacks are more likely to connect, relative to whites, when they comprise a smaller fraction of local population, making the Internet a substitute for agglomeration of preference minorities within cities. Finally, using online and offline spending data, we find that connected persons spend more on books and clothing online, relative to their offline spending, if they are farther from offline stores. This indicates that the Internet functions as a substitute for proximity to retail outlets.

JEL-codes: R00 R12 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-geo, nep-net and nep-ure
Note: IO PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published as Sinai, Todd and Joel Waldfogel. "Geography And The Internet: Is The Internet A Substitute Or A Complement For Cities?," Journal of Urban Economics, 2004, v56(1,Jul), 1-24.

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Journal Article: Geography and the Internet: is the Internet a substitute or a complement for cities? (2004)
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