Spatial interactions

Kim, Jun Sung; Patacchini, Eleonora; PICARD, Pierre M; ZENOU, Yves

doi:10.3982/qe1720

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Spatial interactions

Kim, Jun Sung; Patacchini, Eleonora; PICARD, Pierre M et al.

2023 • In Quantitative Economics, 14 (4), p. 1295-1335

Peer Reviewed verified by ORBi

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https://hdl.handle.net/10993/58333

DOI
10.3982/qe1720

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Keywords :

Economics and Econometrics

Abstract :

[en] This paper studies how the strength of social ties is affected by the geographical location of other individuals and their social capital. We characterize the equilibrium in terms of both social interactions and social capital. We show that lower travel costs increase not only the interaction frequency but also the social capital for all agents. We also show that the equilibrium frequency of interactions is lower than the efficient one. Using a unique geocoded data set of friendship networks among adolescents in the United States, we structurally estimate the model and show that indeed agents socially interact less than that at the first best optimum. Our policy analysis suggests that, at the same cost, subsidizing social interactions yield a higher total welfare than subsidizing transportation costs.

Disciplines :

Quantitative methods in economics & management

Author, co-author :

Kim, Jun Sung; Department of Economics, Sungkyunkwan University

Patacchini, Eleonora; Department of Economics, Bocconi University ; Department of Economics, Cornell University

PICARD, Pierre M ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM) ; LIDAM/CORE, Université catholique de Louvain

ZENOU, Yves ; Department of Economics, Monash University ; CEPR ; IZA

External co-authors :

yes

Language :

English

Title :

Spatial interactions

Publication date :

November 2023

Journal title :

Quantitative Economics

ISSN :

1759-7323

eISSN :

1759-7331

Publisher :

The Econometric Society

Volume :

Issue :

Pages :

1295-1335

Peer reviewed :

Peer Reviewed verified by ORBi

Additional URL :

https://onlinelibrary.wiley.com/doi/pdf/10.3982/QE1720

Funders :

Research Institute of Economy, Trade and Industry
Fonds National de la Recherche Luxembourg
Fonds National de la Recherche Luxembourg

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since 30 November 2023

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