PDF《The Death of Cities? The Death of》

The Death of Cities? The Death of Distance? Evidence from the Geography of Commercial Internet Usage Jed Kolko Harvard University for presentation at the Cities in the Global Information Society Conference, Newcastle upon Tyne, November 22-24,

1999 forthcoming in Selected Papers from the Telecommunications Policy Research Conference

1999 2 Where is the internet? It is everywhere, as businesses and households even in the remotest parts of the world are discovering how internet technology revolutionizes communication.

But it is also nowhere, with its nearly invisible infrastructure and its ephemeral content. Together, its apparent ubiquity and invisibility give its users a sense of placelessness, of freedom from the traditional constraints of physical distance. But this placelessness is an illusion. The internet is where its users are. Those users are not everywhere equally: commercial internet domains are disproportionately concentrated in larger metropolitan areas. Firms are more likely to register internet domains, the larger the city in which they are located. This fact runs counter to the popular prediction that the internet should boost the fortunes of small cities and rural areas more than those of larger cities. The great advantage of cities, the popular argument goes, is that cities lower the costs of transporting goods and sharing ideas. Because the internet, too, lowers the costs of transportation (of documents, for instance) and of communication, the internet may replace some of the traditional functions of cities, allowing internet users to reap the advantages offered in cities without having to locate there. Gilder (1995) takes this argument to the extreme, claiming that the internet will cause the death of cities.

1 This paper uses data on the geographic diffusion of commercial internet usage to reconcile the fact that internet adoption is higher in larger cities with the widespread claim that the internet substitutes for the advantages of cities. Three hypotheses are considered. First is that the convention wisdom is just plain wrong, and the internet is

1 Similar predictions have been expressed by Peter Drucker (1989) and Bill Gates (1995). The National Research Council (1998) puts it more soberly: One can anticipate a shift of population away from the metropolitan areas to bucolic agricultural settings (rural Vermont, the California wine country, fishing villages), to resort areas (Aspen, Monterey, Sedona), and to the sunbelt and beachfront. Just as the automobile, superhighways, and trucking helped

3 actually a complement, rather than a substitute, for the face-to-face communication that cities facilitate. Second is that the internet is indeed a substitute for face-to-face communication, but cities offer other advantages, like skilled labor and better infrastructure, that facilitates internet usage. Third is that the internet is a substitute for longer-distance communication than the sort that cities facilitate, so that its main effect is benefiting remote cities (though not necessarily smaller cities). Rather than causing the death of cities, the internet furthers the death of distance. These three hypotheses are not mutually exclusive. The empirical results support the first and third hypotheses. There is a positive relationship between city size and internet usage, as measured by commercial internet domain registration, even after controlling for a range of other factors that could explain this relationship. The proximity of a city to other cities, however, is negatively related to internet usage, supporting the hypothesis that the internet is a substitute for longer- distance communication. Similar analysis using a different data source -- individual-level computer usage data from the Current Population Survey C yields the same conclusions. This paper has four sections. The first section presents the basic facts on the geography of commercial internet adoption. The second outlines the three hypotheses. The third describes the data and the empirical strategy. The fourth presents the results. SECTION 1: THE BASIC FACTS The most dramatic fact about the internet is its rapid growth. Over the period January