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http://ssrn.com/abstract=1636596
 
 

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Evidence of a Modest Price Decline in Us Broadband Services


Shane M. Greenstein


Northwestern University - Kellogg School of Management; National Bureau of Economic Research (NBER)

Ryan C. McDevitt


University of Rochester - Simon Graduate School of Business

July 2010

NBER Working Paper No. w16166

Abstract:     
In this paper, we construct a price index for broadband services in the United States between 2004 and 2009. We analyze over 1500 service contracts offered by DSL and cable providers in the United States. We employ a mix of matched-model methods and hedonic price index estimations to adjust for qualitative improvements. In general, we find some evidence of 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 five-year period, which is faster than the BLS estimates for the last three years. These modest price declines look nothing like other parts of electronics, such as computers or integrated circuits, which raises many questions. The results also inform a range of policy discussions about US broadband services.

Number of Pages in PDF File: 40

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Date posted: July 12, 2010  

Suggested Citation

Greenstein, Shane M. and McDevitt, Ryan C., Evidence of a Modest Price Decline in Us Broadband Services (July 2010). NBER Working Paper No. w16166. Available at SSRN: http://ssrn.com/abstract=1636596

Contact Information

Shane M. Greenstein (Contact Author)
Northwestern University - Kellogg School of Management ( email )
2001 Sheridan Road
Evanston, IL 60208
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Ryan C. McDevitt
University of Rochester - Simon Graduate School of Business ( email )
Rochester, NY 14627
United States
HOME PAGE: http://sites.google.com/site/ryanmcdevitt/
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