TY  - JOUR
AU  - Greenstein,Shane
AU  - McDevitt,Ryan C.
TI  - The Broadband Bonus: Accounting for Broadband Internet's Impact on U.S. GDP
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14758
PY  - 2009
Y2  - February 2009
UR  - http://www.nber.org/papers/w14758
L1  - http://www.nber.org/papers/w14758.pdf
N1  - Author contact info:
Shane Greenstein
The Elinor and Wendell Hobbs Professor
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL  60208-2013
Tel: 847/467-5672
Fax: 847/467-1777
E-Mail: greenstein@kellogg.northwestern.edu

Ryan C. McDevitt
University of Rochester
18 Pepperwood Court
Pittsford, NY 14534
E-Mail: ryan.mcdevitt@simon.rochester.edu
AB  - How much economic value did the diffusion of broadband create? We provide benchmark estimates for 1999 to 2006. We observe $39 billion of total revenue in Internet access in 2006, with broadband accounting for $28 billion of this total. Depending on the estimate, households generated $20 to $22 billion of the broadband revenue. Approximately $8.3 to $10.6 billion was additional revenue created between 1999 and 2006. That replacement is associated with $4.8 to $6.7 billion in consumer surplus, which is not measured via Gross Domestic Product (GDP). An Internet-access Consumer Price Index (CPI) would have to decline by 1.6% to 2.2% per year for it to reflect the creation of value. These estimates both differ substantially from those typically quoted in Washington policy discussions, and they shed light on several broadband policy issues, such as why relying on private investment worked to diffuse broadband in many US urban locations at the start of the millennium.
ER  -