TY  - JOUR
AU  - Sinai,Todd
AU  - Waldfogel,Joel
TI  - Geography and the Internet: Is the Internet a Substitute or a Complement for Cities?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10028
PY  - 2003
Y2  - October 2003
UR  - http://www.nber.org/papers/w10028
L1  - http://www.nber.org/papers/w10028.pdf
N1  - Author contact info:
Todd M. Sinai
University of Pennsylvania, Wharton School
1465 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
Tel: 215/898-5390
Fax: 215/573-2220
E-Mail: sinai@wharton.upenn.edu

Joel Waldfogel
Frederick R. Kappel Chair in Applied Economics
3-177 Carlson School of Management
University of Minnesota
321 19th Avenue South
Minneapolis, MN 55455
Tel: 612/626-7128
E-Mail: jwaldfog@umn.edu
AB  - 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.
ER  -