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Low-Income Demand for Local Telephone Service: Effects of Lifeline and Linkup

Daniel Ackerberg (), Michael Riordan, Gregory Rosston () and Bradley Wimmer
Additional contact information
Gregory Rosston: Stanford Institute for Economic Policy Research, Stanford University
Bradley Wimmer: Department of Economics, St. Lawrence University

No 08-047, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: This study evaluates the effect of the “Lifeline” and “Linkup” subsidy programs on telephone penetration rates of low-income households. It is the first to estimate low-income telephone demand across demographic groups using location-specific Lifeline and Linkup prices. The demand specifications use a discrete choice model aggregated across demographic groups. GMM estimators correct for the possible endogeneity of subsidized prices. A simulation predicts low-income telephone penetration would be 4.1 percentage points lower without Lifeline and Linkup. Results suggest that Linkup is more cost-effective than Lifeline, and that automatic enrollment in the programs increases penetration.

Keywords: telephone subsidies; low-income telephone usuers (search for similar items in EconPapers)
JEL-codes: H20 O30 (search for similar items in EconPapers)
Date: 2009-08, Revised 2009-08
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