Chapter

Did the Death of Distance Hurt Detroit and Help New York?

Edited by Edward L. Glaeser and Giacomo A. M. Ponzetto

in Agglomeration Economics

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226297897
Published online February 2013 | e-ISBN: 9780226297927 | DOI: http://dx.doi.org/10.7208/chicago/9780226297927.003.0011
Did the Death of Distance Hurt Detroit and Help New York?

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This chapter advances the hypothesis that improvements in transportation and communication technology can explain both the decline of Detroit and the reinvigoration of Manhattan. A model illustrates how reductions in the costs of communication can cause manufacturing cities to decline and innovative cities to grow. Reductions in transport costs reduce the advantages associated with making goods in the Midwest, but they increase the returns to producing new ideas in New York. The model suggests that future improvements in information technology will continue to strengthen cities that are centers of innovation but continue to hurt cities that remain oriented toward manufacturing. The great challenge to urban areas therefore comes from the possibility that innovation will also leave dense agglomerations. As long as improvements in information technology continue to increase the returns to having new ideas, the edge that proximity gives to innovation seems likely to keep such agglomerations strong.

Keywords: communication; transport costs; urban areas; information technology; hurt cities

Chapter.  10202 words.  Illustrated.

Subjects: Microeconomics

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