Geography and the Internet: Is the Internet a Substitute or a Complement for Cities?

We study the tendency to connect to the Internet and the online and offline shopping behavior of connected persons. We document that larger markets have more locally-targeted online content and that individuals are more likely to connect in markets with more local online content, suggesting the Internet is a complement to cities. Yet, holding local online content constant, people are less likely to connect in larger markets, indicating that the Internet is also a substitute for cities. Finally, we find that individuals connect to overcome local isolation, in the form of racial isolation or distance to retail stores.