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Low demand despite broad supply: Is high-speed Internet an infrastructure of general interest?

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  • Lindlacher, Valentin

Abstract

Although the recent years have witnessed a stark increase in the availability of high-speed Internet, adoption rates remain low. One potential explanation is that for most users high-speed Internet does not increase their utility. Using a mixed logit discrete choice model, this paper analyzes whether high-speed and basic Internet are substitutes. I find that they are not. Users who do not need higher speeds, choose basic speeds regardless of high-speed availability. Therefore, high-speed Internet is not an infrastructure of general interest. Consequently, policy-makers cannot increase usage of high-speed Internet by solely fostering its rollout.

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  • Lindlacher, Valentin, 2021. "Low demand despite broad supply: Is high-speed Internet an infrastructure of general interest?," Information Economics and Policy, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:iepoli:v:56:y:2021:i:c:s0167624521000123
    DOI: 10.1016/j.infoecopol.2021.100924
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    More about this item

    Keywords

    High-speed Internet; Broadband; Discrete choice; Mixed logit;
    All these keywords.

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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