More Bits – More Bucks? Measuring the Impact of Broadband Internet on Firm Performance

30 Pages Posted: 27 May 2011

See all articles by Irene Bertschek

Irene Bertschek

ZEW – Leibniz Centre for European Economic Research

Daniel Cerquera

ZEW – Leibniz Centre for European Economic Research

Gordon J. Klein

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE)

Date Written: 2011

Abstract

The paper provides empirical evidence for the causal impact of broadband Internet on the economic performance of German firms. Performance is measured in terms of labour productivity and realised process and product innovations. The analysis refers to the early phase of DSL expansion in Germany from 2001 to 2003, when roughly 60 percent of the German firms already used broadband Internet. Identification relies on instrumental variable estimation taking advantage of information on the availability of DSL broadband at the postal code level. The results show that broadband Internet has no impact on firms' labour productivity whereas it exhibits a positive and significant impact on their innovation activity.

Keywords: D22, L23, O31

JEL Classification: labour productivity, innovation, broadband Internet

Suggested Citation

Bertschek, Irene and Cerquera, Daniel and Klein, Gordon J., More Bits – More Bucks? Measuring the Impact of Broadband Internet on Firm Performance (2011). ZEW - Centre for European Economic Research Discussion Paper No. 11-032, Available at SSRN: https://ssrn.com/abstract=1852365 or http://dx.doi.org/10.2139/ssrn.1852365

Irene Bertschek (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Daniel Cerquera

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Gordon J. Klein

Heinrich Heine University Dusseldorf - Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

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