DP2293 Internet Cluster Emergence

Author(s): Danny Quah
Publication Date: November 1999
Keyword(s): Distribution Dynamics, Economic Geography, Internet, Location, Space, Time, Toepitz, Waves, Weightless Economy
JEL(s): D30, O10, O18, O33
Programme Areas: International Macroeconomics, International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2293

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.