State Aid for Broadband and Crowding Out of Private Investment: Evidence from the French Market

Marc Bourreau, Lukasz Grzybowski and Ángela Muñoz-Acevedo ()
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Ángela Muñoz-Acevedo: Deloitte Finance

No 2025-24, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: In this paper, we investigate the potential crowding out of private investment by public subsidies in the deployment of broadband fiber networks. We estimate a model of fiber entry using a rich dataset on fiber deployment for more than 34,000 municipalities in mainland France from 2014 to 2019. We then assess whether private investment would have occurred in subsidized municipalities in the absence of state aid. We find that in 36% of cases, public subsidies were allocated to municipalities where private entry would have occurred within three years. We estimate that about 902 million euros of the total 2,203 million euros in total subsidies disbursed by the end of 2019 may have crowded out private investment. However, we also show that the French broadband plan accelerated fiber coverage in subsidized municipalities in the early stages of deployment.

Keywords: State Aid; Ex-Post Evaluation; Broadband; Entry; Coverage; Crowding Out (search for similar items in EconPapers)
JEL-codes: D22 H44 L1 L33 L4 L96 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2025
New Economics Papers: this item is included in nep-ict and nep-reg
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https://www.wne.uw.edu.pl/download_file/6252/0 First version, 2025 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2025-24

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