Advertisement

Review of Industrial Organization

, Volume 38, Issue 2, pp 173–190 | Cite as

From Network Externalities to Broadband Growth Externalities: a Bridge not yet Built

  • John W. MayoEmail author
  • Scott Wallsten
Article

Abstract

Quantifying the impact of new technologies on economic activity has proven notoriously difficult. Indeed, it has taken decades of research to understand confidently the linkages between the advances in information, communications, and technology (ICT) spawned by the personal computer and aggregate economic activity. Today, the rapid deployment of broadband technology presents economists with this same challenge. In this paper, we explore the foundations of network and growth externalities that are associated with broadband deployment. We find that both theoretical and empirical models that better specify the micro-transmission paths in which broadband are likely to enhance economic output, employment and productivity are needed.

Keywords

Broadband Network externalities Growth externalities 

JEL Classification

L96 D62 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Atkinson, R. D. (2007). The case for a national broadband policy [Electronic version]. The Information Technology and Innovation Foundation, 1–16.Google Scholar
  2. Barnett A. H., Kaserman D. L. (1998) The simple welfare economics of network externalities and the uneasy case for subscribership subsidies. Journal of Regulatory Economics 13: 245–254CrossRefGoogle Scholar
  3. Brynjolfsson E., Saunders A. (2010) Wired for innovation: How information technology is reshaping the economy. The MIT Press, Cambridge, MAGoogle Scholar
  4. Crandall R., Lehr W., Litan R. (2007) The effects of broadband deployment on output and employment: A cross-sectional analysis of US data [Electronic version]. Issues in Economic Policy The Brookings Institution 6: 1–35Google Scholar
  5. David P. A. (1990) The dynamo and the computer: An historical perspective on the modern productivity paradox. American Economic Review 80: 355–361Google Scholar
  6. Davidson, C. M., & Santorelli, M. J. (2008). Network effects: An introduction to broadband technology & regulation. A Report to the US Chamber of Commerce.Google Scholar
  7. Goolsbee A., Klenow P.J. (2002) Evidence on learning and network externalities in the diffusion of home computers. Journal of Law and Economics 45: 317–343CrossRefGoogle Scholar
  8. Gowrisankaran G., Stavins J. (2004) Network externalities and technology adoption: Lessons from electronic payments. RAND Journal of Economics 35: 260–276CrossRefGoogle Scholar
  9. Greenstein, S., & McDevitt, R. C. (2009). The broadband bonus: Accounting for broadband internet’s impact on US GDP. Working Paper 14758, NBER Working Paper Series.Google Scholar
  10. Hermalin, B. E., & Katz, M. (2007). The economics of product-line restrictions with an application to the network neutrality debate. AEI-Brookings Joint Center for Regulatory Studies, Working Paper 07-02.Google Scholar
  11. Holt L., Jamison M. (2009) Broadband and contributions to economic growth: Lessons from the US experience. Telecommunications Policy 33: 575–581CrossRefGoogle Scholar
  12. Joint Center. (2006). Economists’ statement on broadband policy. AEI-Brookings Joint Center for Regulatory Studies.Google Scholar
  13. Katz M. L., Shapiro C. (1986) Technology adoption in the presence of network externalities. The Journal of Political Economy 94: 822–841CrossRefGoogle Scholar
  14. Katz M., Shapiro C. (1994) Systems competition and network effects. Journal of Economic Perspectives 8: 93–115Google Scholar
  15. Klenow P. J., Rodriguez-Clare Andres (2005) Externalities and growth. Handbook of Economic Growth 1A: 818–859Google Scholar
  16. Liebowitz S. J., Margolis S. E. (2002) Network effects. In: Cave M. E., Majumdar S. K., Vogelsang I. (eds) Handbook of telecommunications cconomics. Elsevier, North Holland, pp 76–97Google Scholar
  17. Mayo J. W. (2009) Universal service: Can we do more with less?. In: May R. J. (eds) New directions in communications policy. Carolina Academic Press, Durham, pp 101–120Google Scholar
  18. Miller, N. H. (2008). Competition when consumers value firm scope. EAG Working Paper 08-7, Department of Justice Antitrust Division.Google Scholar
  19. Romer P. M. (1986) Increasing returns and long-run growth. Journal of Political Economy 94: 1002–1037CrossRefGoogle Scholar
  20. Saloner G., Shepherd A. (1995) Adoption of technologies with network effects: An empirical examination of the adoption of automatic teller machines. RAND Journal of Economics 26: 479–501CrossRefGoogle Scholar
  21. Smith, A. (2010). Home broadband 2010. Pew Internet and American Life.Google Scholar
  22. Solow, R. (1987). New York review of books, July 12.Google Scholar
  23. Tirole J. (1988) The theory of industrial organization. The MIT Press, Cambridge, MAGoogle Scholar
  24. Turner, S. D. (2006). Broadband reality check II: The truth behind America’s digital decline. Freepress.Google Scholar
  25. Wallsten, S. (2009, March). Using competitive bidding to reform the universal service high cost fund. (Testimony Before the Committee on Energy and Commerce Subcommittee on Communications, Technology, and the Internet, US House of Representatives, Washington, DC).Google Scholar

Copyright information

© Springer Science+Business Media, LLC. 2011

Authors and Affiliations

  1. 1.McDonough School of Business, Georgetown Center for Business and Public PolicyGeorgetown UniversityWashingtonUSA
  2. 2.Technology Policy InstituteWashingtonUSA
  3. 3.Georgetown Center for Business and Public PolicyGeorgetown UniversityWashingtonUSA

Personalised recommendations