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State Aid for Broadband and Crowding Out of Private Investment: Evidence from the French Market

Author

Listed:
  • Marc Bourreau

    (Telecom Paris, Institut Polytechnique de Paris, CREST, France, and CESifo)

  • Lukasz Grzybowski

    (Faculty of Economic Sciences, University of Warsaw)

  • Ángela Muñoz-Acevedo

    (Deloitte Finance)

Abstract

In this paper, we investigate the potential crowding out of private investment by public subsidies in the deployment of broadband fiber networks. We estimate a model of fiber entry using a rich dataset on fiber deployment for more than 34,000 municipalities in mainland France from 2014 to 2019. We then assess whether private investment would have occurred in subsidized municipalities in the absence of state aid. We find that in 36% of cases, public subsidies were allocated to municipalities where private entry would have occurred within three years. We estimate that about 902 million euros of the total 2,203 million euros in total subsidies disbursed by the end of 2019 may have crowded out private investment. However, we also show that the French broadband plan accelerated fiber coverage in subsidized municipalities in the early stages of deployment.

Suggested Citation

  • Marc Bourreau & Lukasz Grzybowski & Ángela Muñoz-Acevedo, 2025. "State Aid for Broadband and Crowding Out of Private Investment: Evidence from the French Market," Working Papers 2025-24, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2025-24
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    File URL: https://www.wne.uw.edu.pl/download_file/6252/0
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets

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