Comparative Governance of For-profit Provision of Public Services: Investor-Owned Firms vs. Cooperatives as Internet Providers

Abstract

We examine the comparative governance of for-profit provision of public services, distinguishing between two types of for-profit providers: investor-owned firms (IOFs) and cooperatives. We argue that because cooperatives are owned and operated by those who benefit directly from the positive externalities generated by public services they are well suited to serving poor or high cost communities that may be underserved by IOFs, and that this will be especially true when they serve less diverse communities or needs. We test and find support for these predictions in the context of internet service provision in the United States. Our study thus offers a discriminating alignment perspective on the provision of public services, while also shedding light on the role of cooperatives in addressing societal grand challenges.

Keywords: cooperatives, public-private, comparative governance, digital inequality, infrastructure provision

JEL Classification: D22, P13, H4, L3, O18