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Are Internet and Face-to-Face Contacts Complements or Substitutes? Evidence from Internet Traffic between Cities

  • David Cuberes

    ()

    (Department of Economics, The University of Sheffield)

This paper uses a new dataset on Internet flows between cities around the world to study whether electronic communication and face-to-face contacts are substitutes or complements. In order to test these competing hypotheses I estimate a regression of bilateral Internet traffic on physical distance between pairs of cities and several city and country-specific variables that include a control for cities’ population, countries’ population and per capita GDP, the number of Internet users, the intensity of trade between countries, and several dummies that aim to capture city specific effects and the degree of familiarity between residents of different countries. The estimates reveal a strong and robust negative effect of distance on the intensity of electronic communications, suggesting that Internet and face-to-face contacts are more likely to be complements than substitutes.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2013_010.html
File Function: First version, 2013
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2013010.

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Length: 26 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:shf:wpaper:2013010
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