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A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties

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  • Briglauer, Wolfgang
  • Dürr, Niklas
  • Gugler, Klaus

Abstract

This study aims to assess the economic benefits of high-speed broadband within and across neighboring counties in Germany. Utilizing a balanced panel dataset of 401 German counties with data from 2010 to 2015 as well as different panel estimation techniques, we find that an increase in average broadband speed has a significantly positive effect on regional GDP in the average German county. Furthermore, we find that broadband deployment in German counties induces not only substantial economic benefits in terms of direct effects within counties but also positive regional externalities across counties. According to our estimation results, an increase in average bandwidth speed by one unit (1 Mbit/s) induces a rise in regional GDP of 0.18%. This effect is almost doubled if we also take regional externalities into account (0.31%). Moreover, we find that regional agglomeraton effects are of particular relevance for rural counties. Our cost-benefit analysis of subsidies based on conservative estimates suggests efficiency gains, as the total economic per capita benefits (€164) of subsidy programs to encourage broadband expansion exceeded their associated per capita costs (€114).

Suggested Citation

  • Briglauer, Wolfgang & Dürr, Niklas & Gugler, Klaus, 2021. "A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties," International Journal of Industrial Organization, Elsevier, vol. 74(C).
    • Handle: RePEc:eee:indorg:v:74:y:2021:i:c:s0167718720301004
    DOI: 10.1016/j.ijindorg.2020.102677
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    3. Cambini, Carlo & Grinza, Elena & Sabatino, Lorien, 2023. "Ultra-fast broadband access and productivity: Evidence from Italian firms," International Journal of Industrial Organization, Elsevier, vol. 86(C).
    4. Qing Li & Yanrui Wu, 2023. "ICT, technological diffusion and economic growth in Chinese cities," Empirical Economics, Springer, vol. 64(4), pages 1737-1768, April.
    5. Ndubuisi, Gideon & Otioma, Chuks & Owusu, Solomon & Tetteh, Godsway Korku, 2022. "ICTs quality and technical efficiency: An empirical analysis," Telecommunications Policy, Elsevier, vol. 46(10).
    6. Abrardi, Laura & Sabatino, Lorien, 2023. "Ultra-broadband investment and economic resilience: Evidence from the Covid-19 pandemic," Telecommunications Policy, Elsevier, vol. 47(2).
    7. Christoph Grimpe & Wolfgang Sofka & Ulrich Kaiser, 2023. "Competing for digital human capital: The retention effect of digital expertise in MNC subsidiaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 54(4), pages 657-685, June.

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    More about this item

    Keywords

    High-speed broadband infrastructure; Economic growth; Spatial externalities; German counties; Panel data;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • L98 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Government Policy
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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