Does Public Competition Crowd Out Private Investment? Evidence from Municipal Provision of Internet Access

Kyle Wilson

American Economic Journal: Microeconomics, 2025, vol. 17, issue 4, 399-431

Abstract: Government infrastructure investment may crowd out investment from private firms or induce them to invest preemptively. The tension between these effects underlies the policy debate over municipal provision of internet access. I estimate demand for broadband and combine these results with a dynamic oligopoly model of private and public firms' entry and investment decisions. I simulate a ban on public entry and find that municipalities crowd out more private fiber-optic investment than they induce through preemption. I estimate that this ban decreases consumer surplus and municipal profits by $27 billion while increasing private profits by $23 billion over ten years.

JEL-codes: D22 G31 H44 H57 L33 L96 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/mic.20210110

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