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We consider an economic geography model with two inter-regional proximity structures, one due to trade linkages and the other due to social interactions. We investigate how the network structure of social interactions, or the social proximity structure, affects the timing of endogenous agglomeration and the spatial distribution of workers across regions. Endogenous agglomeration emerges when inter-regional trade and/or social interactions incur high transportation costs, and the uniform dispersion occurs when these costs become negligibly small (i.e., when distance dies). In many-region geography, the network structure of social proximity
emerges as the determinant of the geographical distribution of workers when trade becomes freer. If social proximity is governed by geographical distance (as in ground transportation), a mono-centric concentration emerges. If geographically distant pairs of regions are “socially close” (due to, e.g., passenger transportation modes with strong distance economy such as regional airlines), then geographically multi-centric spatial distribution can be sustainable.
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Social network Agglomeration Dispersion Many regions Stability