Evidence of a modest price decline in US broadband services
AbstractIn this paper, we construct a consumer price index for broadband services in the United States using over 1500 service contracts offered by DSL and cable providers from 2004 through 2009. This exercise frames a range of open questions about measuring price changes in a manner that informs policy discussions about US broadband services. We employ approaches used commonly for constructing a consumer price index by using a mix of matched-model methods and hedonic price index estimations to adjust for qualitative improvements. We find a quality-adjusted price decline, but the evidence points towards a modest decline at most. Our estimates of the price decline range from 3% to 10% in quality-adjusted terms for the 5-years period, which is faster than the BLS estimates for the last 3Â years. In contrast to other innovative industries that experience rapid price declines, such as computers or integrated circuits, the modest price decline for broadband services raises many questions.
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Bibliographic InfoArticle provided by Elsevier in its journal Information Economics and Policy.
Volume (Year): 23 (2011)
Issue (Month): 2 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505549
Broadband Price index DSL Cable Internet access Policy;
Other versions of this item:
- Shane Greenstein & Ryan C. McDevitt, 2010. "Evidence of a Modest Price Decline in US Broadband Services," NBER Working Papers 16166, National Bureau of Economic Research, Inc.
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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