Benefits of communications infrastructure capital In U.S. Economy

M. Ishaq Nadiri, Banani Nandi

    Research output: Contribution to journalArticlepeer-review

    Abstract

    In this paper we empirically estimate the contribution of the communications infrastructure to the growth of output and productivity at the dis-aggregate industry and at the aggregate economy levels. The estimated value of the marginal benefits or the shadow price of the communications infrastructure capital is positive in each of 34 industries representing the major industrial sectors of the U.S. economy. This effect captures network externality benefits and can be interpreted as a willingness to pay by each industry for communications infrastructure capital services over and above their direct payments for communications services. These results suggest that an increase in communications infrastructure capital services reduces cost in all the industries and as a consequence that of the entire economy. The relatively high value of estimated total marginal benefits for the aggregate economy indicates a high social rate of return to the investments in communications infrastructure.

    Original languageEnglish (US)
    Pages (from-to)89-107
    Number of pages19
    JournalEconomics of Innovation and New Technology
    Volume10
    Issue number2-3
    DOIs
    StatePublished - 2001

    Keywords

    • Communications
    • Infrastructure
    • Marginal benefits
    • Network externality
    • Productivity

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)
    • Management of Technology and Innovation

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