The Liftoff of Consumer Benefits from the Broadband Revolution

Dutz Mark A., Orszag Jonathan M. and Robert Willig
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Dutz Mark A.: The World Bank
Orszag Jonathan M.: Compass Lexecon

Review of Network Economics, 2012, vol. 11, issue 4, 34

Abstract: This paper uses both a discrete choice demand model and a direct survey method to derive robust measures of the contribution of home broadband to consumer welfare during the early years of broadband adoption by U.S. households. We estimate a demand system that distinguishes between cable, DSL, satellite and fiber broadband versus dial-up Internet services. We allow household preferences for Internet services to vary depending on the share of rural households in each geographic market, and find a significant impact of rural geography on demand. The estimated own-price elasticity of demand for broadband declines over time from -1.5 in 2005 to -0.7 in 2008. Consumer surplus from Internet is found to concentrate in broadband services, with the net consumer benefits from home broadband in 2008 on the order of $32 billion per year.

Keywords: broadband; internet; consumer surplus; demand estimation (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1515/1446-9022.1355

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