Evidence of a modest price decline in US broadband services

Published

Journal Article

In this paper, we construct a consumer price index for broadband services in the United States using over 1500 service contracts offered by DSL and cable providers from 2004 through 2009. This exercise frames a range of open questions about measuring price changes in a manner that informs policy discussions about US broadband services. We employ approaches used commonly for constructing a consumer price index by using a mix of matched-model methods and hedonic price index estimations to adjust for qualitative improvements. We find a quality-adjusted price decline, but the evidence points towards a modest decline at most. Our estimates of the price decline range from 3% to 10% in quality-adjusted terms for the 5-years period, which is faster than the BLS estimates for the last 3. years. In contrast to other innovative industries that experience rapid price declines, such as computers or integrated circuits, the modest price decline for broadband services raises many questions. © 2011 Elsevier B.V.

Full Text

Duke Authors

Cited Authors

  • Greenstein, S; McDevitt, R

Published Date

  • June 1, 2011

Published In

Volume / Issue

  • 23 / 2

Start / End Page

  • 200 - 211

International Standard Serial Number (ISSN)

  • 0167-6245

Digital Object Identifier (DOI)

  • 10.1016/j.infoecopol.2011.03.002

Citation Source

  • Scopus