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Social networks and interactions in cities
Stockholm University, Faculty of Social Sciences, Department of Economics. Research Institute of Industrial Economics (IFN), Sweden.
2014 (English)In: Journal of Economic Theory, ISSN 0022-0531, E-ISSN 1095-7235, Vol. 150, 426-466 p.Article in journal (Refereed) Published
Abstract [en]

We examine how interaction choices depend on the interplay of social and physical distance, and show that agents who are more central in the social network, or are located closer to the geographic center of interaction, choose higher levels of interactions in equilibrium. As a result, the level of interactivity in the economy as a whole will rise with the density of links in the social network and with the degree to which agents are clustered in physical space. When agents can choose geographic locations, there is a tendency for those who are more central in the social network to locate closer to the interaction center, leading to a form of endogenous geographic separation based on social distance. We also show that the market equilibrium is not optimal because of social externalities. We determine the value of the subsidy to interactions that could support the first-best allocation as an equilibrium. Finally, we interpret our model in terms of labor-market networks and show that the lack of good job contacts would be here a structural consequence of the social isolation of inner-city neighborhoods.

Place, publisher, year, edition, pages
2014. Vol. 150, 426-466 p.
Keyword [en]
Social networks, Urban-land use, Spatial mismatch, Network centrality
National Category
Economics
Identifiers
URN: urn:nbn:se:su:diva-103313DOI: 10.1016/j.jet.2013.09.009ISI: 000333794100002OAI: oai:DiVA.org:su-103313DiVA: diva2:717552
Note

AuthorCount:2;

Available from: 2014-05-15 Created: 2014-05-12 Last updated: 2017-12-05Bibliographically approved

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