Reaching underserved areas through subsidy auctions: The case of fast internet in the US
What is your research about?
Access to fast internet connectivity has become a necessity in today's economy. Fast internet enables consumers to search for goods that best fit their preferences, workers to search for jobs, firms to find ideal employees, learners to access new knowledge, and entrepreneurs to start new businesses.
Despite the importance of fast internet connectivity in the modern economy, there are substantial inequalities in access to this technology, both across and within countries. Overcoming these inequalities – commonly referred to as the 'Digital Divide' – have been the focus of a multitude of different policies around the world. However, our knowledge of the relative effectiveness of these policies remains limited.
We want to answer several questions regarding subsidy auctions, related to both the effects of the observed policy and policy design. Do areas targeted by subsidization benefit? Does service availability, as measured by the number of firms and the type of service available, improve? Are these effects long-lasting or transitory? What is the effect on measured, rather than available, speeds? What is the take-up of the newly available services? Are prices in the treated areas comparable to prices in areas ineligible for subsidies? Are there pricing externalities across regions due to increases in demand elasticity and marginal costs? Is the auction welfare-enhancing? Does the government trade-off quality and cost in the same way as consumers? Could the auction be made more efficient by taking consumer preferences into account? To what extent do market power considerations affect the efficiency of the auction? How can they be incorporated in the auction design and how can estimates of consumer preferences be used to do so? Is there a trade-off between low-cost provision and market power? Does the auction properly account for complementarities in serving adjacent areas? Is there a trade-off between such complementarities and market power?"
How will the Stone Centre grant help your research?
The Stone Centre grant will help us by allowing us to buy a highly detailed dataset on fixed broadband subscriptions from the United States Federal Communications Commission.
What will you produce as part of your research?
We will write a working paper and a journal article.
About this grant
Title of the project: Reaching underserved areas through subsidy auctions: The case of fast internet in the US
Value of the grant: £20,000
Duration: November 2022 – ongoing
