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Presented
Economics
of the Internet Invited Session, EEA 1999 Congress, Santiago de
Compostela, 02--04 September 1999
and
Groningen
Conference, The Web as an Economic Phenomenon, 21 Dec 1999
(with
pictures).
Published: European Economic Review May 2000, vol. 44 no. 4--6,
pp. 1032--1044
|
Internet development holds the promise of transmitting economic value across physical space at zero marginal cost. In such a ``weightless economy'', what factors matter for the location of economic activity and thus for economic development? This paper sketches a model of spatial dynamics over a three-dimensional globe, where transportation costs don't matter. The paper develops conditions under which clusters of activity emerge. |