Monday, December 03, 2007
The reason commercial space is high-priced is because of positive externalities that occur when people work together. You get what urban economists call "agglomeration economies" from clustering businesses together. The question is whether the same types of economies can be generated in an online environment.
In a comment from Mark Perry's reference to this post, Spencer asks whether this happens in all cities. If the diseconomies of agglomeration happen at night more than in the day -- a function of transportation and communication costs, in part -- then I'd say yes.