Does Public Competition Crowd Out Private Investment? Evidence from Municipal Provision of Internet Access
Year: 2016
Type: article
Abstract: Government infrastructure investment may crowd out investment from private firms or induce them to invest preemptively. The tension between these effects underlies the policy debate over municipal provision of internet access. I estimate demand for broadband and combine these results with a dynamic oligopoly model of private and public firms' entry and investment decisions. I simulate a ban on public entry and find that municipalities crowd out more private fiber-optic investment than they induce through preemption. I estimate that this ban decreases consumer surplus and municipal profits by $27 billion while increasing private profits by $23 billion over ten years. (JEL D22, G31, H44, H57, L33, L96)
DOI: 10.1257/mic.20210110
Author: Kyle Wilson
Institution: Pomona College
Language: English
Topic: ICT Impact and Policies
Subfield: Media Technology
Field: Engineering
Domain: Physical Sciences
Open Access status: green
OpenAlex ID: W3122626366