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Ability, location and household demand for Internet bandwidth

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  • Savage, Scott James
  • Waldman, Donald M.

Abstract

This paper examines consumer preferences for Internet bandwidth, focusing on technical ability and urban/rural location as sources of preference heterogeneity. An economic model is outlined that shows that ability decreases the effective price of bandwidth. As a result of this decrease, part of the total effect of an increase in ability will always be an increase in the demand for bandwidth. The implication is empirically investigated with an econometric approach that overcomes the limitations of the aggregated data that is currently available to describe consumer preferences. Results show that high-ability, urban consumers are willing to pay a substantive monthly premium for an improvement in bandwidth relative to rural consumers.

Suggested Citation

  • Savage, Scott James & Waldman, Donald M., 2009. "Ability, location and household demand for Internet bandwidth," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 166-174, March.
  • Handle: RePEc:eee:indorg:v:27:y:2009:i:2:p:166-174
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Andre Boik & Shane Greenstein & Jeffrey Prince, 2016. "The Empirical Economics of Online Attention," NBER Working Papers 22427, National Bureau of Economic Research, Inc.
    2. Rosston Gregory L. & Savage Scott J & Waldman Donald M, 2010. "Household Demand for Broadband Internet in 2010," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-45, September.
    3. Dolente, Cosimo & Galea, John Joseph & Leporelli, Claudio, 2010. "Next Generation Access and Digital Divide: Opposite Sides of the Same Coin?," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 9, International Telecommunications Society (ITS).
    4. Sean Lyons, 2014. "Timing and determinants of local residential broadband adoption: evidence from Ireland," Empirical Economics, Springer, vol. 47(4), pages 1341-1363, December.
    5. Sadowski, Bert M., 2017. "Advanced users and the adoption of high speed broadband: Results of a living lab study in the Netherlands," Technological Forecasting and Social Change, Elsevier, vol. 115(C), pages 1-14.
    6. repec:bla:obuest:v:79:y:2017:i:2:p:234-250 is not listed on IDEAS
    7. Aron Debra J. & Ingraham Allan T., 2012. "The Effects of Legacy Pricing Regulation on Adoption of Broadband Service in the United States," Review of Network Economics, De Gruyter, vol. 11(4), pages 1-38, December.
    8. Khanal, Aditya R. & Mishra, Ashok K., 2013. "Assessing the Impact of Internet Access on Household Income and Financial Performance of Small Farms," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143019, Southern Agricultural Economics Association.
    9. Srinuan, Chalita & Bohlin, Erik, 2011. "Understanding the digital divide: A literature survey and ways forward," 22nd European Regional ITS Conference, Budapest 2011: Innovative ICT Applications - Emerging Regulatory, Economic and Policy Issues 52191, International Telecommunications Society (ITS).

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