Broadband Availability and Firm Entry

Posted: 19 Mar 2018

See all articles by Simone Juhasz Silva

Simone Juhasz Silva

Department of Economics and Finance, Murray State University

Narine Badasyan

Department of Economics and Finance, Murray State University

Date Written: March 16, 2018

Abstract

A number of studies suggest that the availability of broadband reduces firm entry costs associated with informing buyers about products, learning about the market tastes, setting up distribution channels, handling legal paperwork, and learning about regulatory environment. It can decrease the disadvantages that young and small firms experience when competing with large incumbents. Moreover, it can promote firm entry as it enhances economic growth. Current empirical evidence indicates that broadband availability facilitates firm entry. Contrastingly, many studies find that the effects of broadband on employment are often limited, varying across industries and across labor markets. This paper investigates the hypothesis that much of the firm entry induced by broadband availability is in the form of “casual ventures”, business activities involving little labor time, where the entry is often a response to bad conditions in the mainstream job market. The data are drawn from the US Census nonemployer statistics and the broadband deployment from NTIA and FCC. In the U.S., the majority of business establishments are nonemployers, yet these firms have small economic impact and average less than 4 percent of all sales and receipts nationally. The paper examines the effects of broadband availability on firm entry and seeks to disentangle the extent that these effects are restricted to nonemployer firms. The policy implications are significant since a large amount of public resources have been invested in broadband deployment aiming to promote employment and economic growth.

Keywords: Firm Entry, Broadband, Non-employer Firms

JEL Classification: M13, O33

Suggested Citation

Silva, Simone and Badasyan, Narine, Broadband Availability and Firm Entry (March 16, 2018). Available at SSRN: https://ssrn.com/abstract=3142174

Simone Silva (Contact Author)

Department of Economics and Finance, Murray State University ( email )

Murray, KY 42071-0009
United States

Narine Badasyan

Department of Economics and Finance, Murray State University ( email )

Murray, KY 42071-0009
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
293
PlumX Metrics