Policy Deterrence: Strategic Investment in U.S. Broadband

Karam Kang and Mo Xiao

No 35992, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Can firms influence policy through investment? Using 2010--2019 U.S. broadband deployment and state policy data, we find that large internet service providers expand capacity more in electorally competitive counties. Greater large-provider capacity in swing counties is associated with fewer subsequent entry- and investment-facilitating policies, especially rights-of-way accommodations that reduce deployment barriers faced by smaller providers. To interpret these patterns, we develop a model in which a large firm's capacity can reduce the policymaker's gain from intervention. In the model, policy deterrence raises the large firm's market share and can reduce total deployment.

JEL-codes: D72 L51 L96 (search for similar items in EconPapers)
Date: 2026-11
Note: IO POL
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