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Social Networks and Interactions in Cities

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  • Helsley, Robert W.

    () (University of California, Berkeley)

  • Zenou, Yves

    () (Monash University)

Abstract

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. Finally, we 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 and show that interaction effort and the incentives for clustering are higher under the subsidy program.

Suggested Citation

  • Helsley, Robert W. & Zenou, Yves, 2011. "Social Networks and Interactions in Cities," IZA Discussion Papers 5506, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5506
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    Cited by:

    1. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    2. Picard, Pierre M. & Zenou, Yves, 2015. "Urban Spatial Structure, Employment and Social Ties: European versus American Cities," IZA Discussion Papers 9166, Institute for the Study of Labor (IZA).
    3. Ilenia Epifani & Rosella Nicolini, 2013. "On The Population Density Distribution Across Space: A Probabilistic Approach," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 481-510, August.
    4. repec:eee:soceps:v:58:y:2017:i:c:p:22-29 is not listed on IDEAS
    5. Christian Ghiglino, 2011. "When Veblen meets Krugman," 2011 Meeting Papers 768, Society for Economic Dynamics.
    6. Firgo, Matthias & Pennerstorfer, Dieter & Weiss, Christoph R., 2016. "Network centrality and market prices: Empirical evidence," Economics Letters, Elsevier, vol. 139(C), pages 79-83.
    7. repec:eee:juecon:v:104:y:2018:i:c:p:77-93 is not listed on IDEAS
    8. Konstantin Büchel und Maximilian von Ehrlich, 2016. "Cities and the Structure of Social Interactions: Evidence from Mobile Phone Data," Diskussionsschriften dp1608, Universitaet Bern, Departement Volkswirtschaft.
    9. König, Michael & Liu, Xiaodong & Zenou, Yves, 2014. "R&D Networks: Theory, Empirics and Policy Implications," CEPR Discussion Papers 9872, C.E.P.R. Discussion Papers.
    10. Topa, Giorgio & Zenou, Yves, 2015. "Neighborhood and Network Effects," Handbook of Regional and Urban Economics, Elsevier.
    11. Pierre Picard & Yves Zenou, 2014. "Urban Spatial Structure, Employement and Social Ties," CREA Discussion Paper Series 14-31, Center for Research in Economic Analysis, University of Luxembourg.
    12. Verdier, Thierry & Zenou, Yves, 2017. "The role of social networks in cultural assimilation," Journal of Urban Economics, Elsevier, vol. 97(C), pages 15-39.
    13. Laurent Bergé & Nicolas Carayol, GREThA, UMR CNRS 5113, Université de Bordeaux & Pascale Roux, 2017. "How do inventor networks affect urban invention?," CREA Discussion Paper Series 17-03, Center for Research in Economic Analysis, University of Luxembourg.
    14. Bender, Stefan & Dorner, Matthias & Harhoff, Dietmar & Hinz, Tina & Hoisl, Karin, 2016. "Social Ties for Labor Market Access - Lessons from the Migration of East German Inventors," CEPR Discussion Papers 11601, C.E.P.R. Discussion Papers.
    15. Bayer, Péter & Herings, P. Jean-Jacques & Peeters, Ronald & Thuijsman, Frank, 2017. "Adaptive Learning in Weighted Network Games," Research Memorandum 025, Maastricht University, Graduate School of Business and Economics (GSBE).
    16. Timo Hiller, 2017. "Too Big to Jail? Key-Player Policies When the Network is Endogenous," Bristol Economics Discussion Papers 17/693, Department of Economics, University of Bristol, UK.
    17. Mirja Meyborg & Axel Schaffer, 2014. "Regional and global collaborations for knowledge in German academia," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 34(2), pages 157-176, October.
    18. Patacchini, Eleonora & Picard, Pierre M & Zenou, Yves, 2015. "Urban Social Structure, Social Capital and Spatial Proximity," CEPR Discussion Papers 10501, C.E.P.R. Discussion Papers.
    19. Gaigné, Carl & Zenou, Yves, 2015. "Agglomeration, city size and crime," European Economic Review, Elsevier, vol. 80(C), pages 62-82.
    20. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications, Elsevier.
    21. Zackary B. Hawley, 2012. "Does Urban Density Promote Social Interaction? Evidence from Instrumental Variable Estimation," The Review of Regional Studies, Southern Regional Science Association, vol. 42(3), pages 223-248, Winter.
    22. Zenou, Yves, 2013. "Spatial versus social mismatch," Journal of Urban Economics, Elsevier, vol. 74(C), pages 113-132.
    23. Del Bello, Carlo L. & Patacchini, Eleonora & Zenou, Yves, 2015. "Neighborhood Effects in Education," IZA Discussion Papers 8956, Institute for the Study of Labor (IZA).
    24. repec:bla:manchs:v:85:y:2017:i:6:p:744-764 is not listed on IDEAS
    25. Christian Ghiglino & Antonella Nocco, 2017. "When Veblen meets Krugman: social network and city dynamics," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(2), pages 431-470, February.

    More about this item

    Keywords

    urban-land use; Bonacich centrality; social networks;

    JEL classification:

    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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