Broadband Internet and Firm Entry: Evidence from Rural Iowa
AbstractThe availability of broadband Internet service should have increased firm productivity and lowered firm entry costs. �However, validating the broadband effect is complicated by the rapid deployment of broadband Internet service across metropolitan areas, removing meaningful variation in broadband availability. �Deployment in rural markets was much more uneven, suggesting that the presence or absence of broadband service may have altered the site selection of firms targeting rural markets.� We investigate the effect of broadband availability on firm location decision in rural Iowa. �We establish a counterfactual baseline firm entry rate for each zip code area in rural counties by showing how the presence of broadband service in a ZIP code in 2001 affected firm entry in 1990-1992 before Broadband was available. �We then measure how the actual presence of broadband service in the same ZIP code affected firm entry in 2000-2002. �We show that the difference in estimated probability of entry between the counterfactual baseline and the actual response ten years later is the Difference-in-Differences estimate of the effect of broadband deployment on firm start-ups. �We find that broadband availability in a rural ZIP code has a positive and significant effect on firm entry in the ZIP code but only in rural markets adjacent to a metropolitan area or with a larger urban population.� Broadband access does not affect new firm entry in more remote rural markets
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 35696.
Date of creation: 03 Dec 2012
Date of revision:
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
More information through EDIRC
Internet; Rural; urban; : broadband; firm entry; metropolitan area;
Other versions of this item:
- Kim, Younjun & Orazem, Peter F., 2012. "Broadband Internet and Firm Entry: Evidence from Rural Iowa," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington, Agricultural and Applied Economics Association 124879, Agricultural and Applied Economics Association.
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-15 (All new papers)
- NEP-BEC-2012-12-15 (Business Economics)
- NEP-COM-2012-12-15 (Industrial Competition)
- NEP-ENT-2012-12-15 (Entrepreneurship)
- NEP-ICT-2012-12-15 (Information & Communication Technologies)
- NEP-SBM-2012-12-15 (Small Business Management)
- NEP-TID-2012-12-15 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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