Digital Dispersion

In which metropolitan areas did businesses move to adopt the Internet most quickly?

A July, 2003 research paper from Carnegie Mellon University, co-authored by Chris Forman, Avi Goldfarb and Shane Greenstein, explores the extent of commercial adoption of the Internet in the nation's 50 largest metropolitan areas.

The paper --
"How did Location Affect Adoption of the Commercial Internet?-Global Village, Urban Density and Industry Composition" --explores the connection between industry composition and city size in explaining business use of the Internet.

Drawing on data from a private survey of businesses, they provide estimates of Internet adoption (basic Internet access for email and web-browsing) and enhancement (the deployment of e-business applications).

The abstract reads:

"The authors test opposing theories on how urban locations influenced the diffusion of Internet
technology. They find evidence that, controlling for industry, participation in the Internet is more likely in rural areas than in urban areas. Nevertheless, talk of the dissolution of cities is premature. Frontier Internet technologies appear more often at establishments in urban areas, even with industry controls.

Major urban areas also contain many establishments from information technology-intensive industries, whose presence could reinforce the concentration of frontier Internet technologies in these areas. However, information technology-intensive industries are numerous and widespread. Hence, so is the use of frontier technology."

The paper is an interesting addition to the ongoing debate over whether "IT acts as a substitute or complement to the agglomeration of economic activity."

My vote goes for recognizing information technology as a complement and driver of the concentration of economic activity around a particular place.

(Thanks for EconData for the note.)