Reference : Urban Interactions
E-prints/Working papers : Already available on another site
Business & economic sciences : Special economic topics (health, labor, transportation…)
http://hdl.handle.net/10993/39180
Urban Interactions
English
Picard, Pierre M mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Jun Sung, Kim []
Patacchini, Eleonora []
Zenou, Yves []
2017
No
[en] Urban location ; social interaction
[en] This paper studies social-tie formation when individuals care about the geographical location of other individuals. In our model, the intensity of social interactions can be chosen at the same time as friends. We characterize the equilibrium in terms of both social interactions and social capital (the value of social interactions offered by each agent) for a general distribution of individuals in the urban geographical space. We show that greater geographical dispersion decreases the incentives to socially interact. We also show that the equilibrium frequency of interactions is lower than the effcient one. Using a unique geo-coded dataset of friendship networks among adolescents in the United States, we estimate the model and validate that agents interact less than the social first best optimum. Our policy analysis suggests that, given the same cost, subsidizing social interactions yields a higher total welfare than subsidizing transportation costs.
Researchers
http://hdl.handle.net/10993/39180
https://ideas.repec.org/p/cpr/ceprdp/12432.html

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