The Effect of Information and Communication Technologies on Urban Structure

The geographic concentration of economic activity occurs because transport costs for goods, people and ideas give individuals and organisations incentives to locate close to each other. Historically, all of these costs have been falling. Such changes could lead us to predict the death of distance. This paper is concerned with one aspect of this prediction: the impact that less costly communication and transmission of information might have on cities and the urban structure. We develop a model which suggests that improvements in ICT will increase the dispersion of economic activity across cities making city sizes more uniform. We test this prediction using cross country data and find empirical support for this conclusion.