By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.
Government infrastructure investment may crowd out investment from private
firms or induce them to invest preemptively. The tension between these
effects underlies the policy debate over municipal provision of internet access.
I estimate demand for broadband and combine these results with a dynamic
oligopoly model of private and public firms’ entry and investment decisions.
I simulate a ban on public entry and find that municipalities crowd out more
private fiber-optic investment than they induce through preemption. I estimate
that this ban decreases consumer surplus and municipal profits by $27 billion
while increasing private profits by $23 billion over 10 years.
