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CEP discussion paper
Buzz: Face-to-Face Contact and the Urban Economy
Michael Storper and Anthony J. Venables
December 2003
Paper No' CEPDP0598:
Full Paper (pdf)

JEL Classification: R1

Tags: agglomeration; clustering; urban economics; face-to-face

This paper argues that existing models of urban concentrations are incomplete unless grounded in the most fundamental aspect of proximity; face-to-face contact. Face-to-face contact has four main features; it is an efficient communication technology; it can help solve incentive problems; it can facilitate socialization and learning; and it provides psychological motivation. We discuss each of these features in turn, and develop formal economic models of two of them. Face-to-face is particularly important in environments where information is imperfect, rapidly changing, and not easily codified, key features of many creative activities.