The broadband bonus: Estimating broadband Internets economic value

How much economic value did broadband Internet create? Despite the importance of this question for national policy, no research has estimated broadbands incremental contribution to U.S. GDP by calibrating against historical adoption and incorporating counterfactuals. This study provides benchmark estimates for 1999 through 2006 and finds that broadband accounts for $28 billion of the $39 billion observed in 2006. Depending on the estimate, households generated $20$22 billion of broadband revenue and approximately $8.3$10.6 billion was additional revenue created between 1999 and 2006. Consumer surplus accounted for $4.8$6.7 billion of this amount, which is not measured in GDP. An Internet-access Consumer Price Index would have to decline by 1.62.2% per year for it to reflect this unmeasured value. These estimates differ from existing benchmarks by an order of magnitude and relate to several policy debates. © 2011 Elsevier Ltd. All rights reserved.

Duke Scholars

Author Ryan Carty McDevitt Fuqua School of Business