Buzz: face-to-face contact and the urban economy

Abstract

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

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