The Value of Broadband and the Deadweight Loss of Taxing New Technology
Austan Goolsbee
No 11994, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
With fixed costs of developing technology, taxes can generate large efficiency costs by slowing the rate of diffusion and these costs are not accounted for in conventional analyses. This paper illustrates this by analyzing the impact that taxes would have had on broadband Internet access at an early stage of its diffusion around the country, combining data on individual demand by area with data on supplier entry in those markets. Applying a tax to broadband in 1998 would have reduced the quantity and generate a large deadweight loss in the conventional model but when the analysis accounts for the fixed costs of entering new markets, taxes would have also delayed entry in several markets. In these places, the lost consumer surplus from delay is an additional deadweight loss and it more than doubles the estimated efficiency costs of taxation. The conventional model also dramatically understates the share of tax burden that would have been borne by customers.
JEL-codes: D6 H2 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-ict, nep-mic, nep-pbe and nep-pub
Note: IO PR PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)
Published as Goolsbee Austan, 2006. "The Value of Broadband and the Deadweight Loss of Taxing New Technology," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-31, April.
Downloads: (external link)
http://www.nber.org/papers/w11994.pdf (application/pdf)
Related works:
Journal Article: The Value of Broadband and the Deadweight Loss of Taxing New Technology (2006) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11994
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11994
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).