Monday, December 03, 2007

Good to work next to you 

Captain Capitalism copies for us an intriguing graphic of the density of New York City by day and by night. He wonders what would happen to commercial building prices if telecommuting became more common.

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.