Shane Greenstein, a professor at Northwestern’s Kellogg School, has written a fascinating (if dry) economic history of the development of the Internet, titled “The Economic Geography of Internet Infrastructure in the United States” (1.7MB pdf download). It’s often been argued that the Internet makes location less important by erasing the physical boundaries of markets and enhancing the richness and speed of long-distance communication. But, as Greenstein explains, it’s not so simple. In some ways, the Internet has encouraged decentralization of economic activity, but in other ways it has increased the rewards of centralization. This discussion is particularly important in thinking through the Internet’s long-term implications for the economic health of both urban and rural areas. Greenstein points to research that suggests that the early, dial-up phase of Internet access did tend to level the economic playing field between city and country but that the now-unfolding broadband phase may have the opposite effect, putting rural areas at an ever greater disadvantage. If so, that would have considerable implications for public policy and regulation, as well as the shape and prosperity of the country.