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Does access to internet promote innovation? A look at the U.S. broadband industry
Author(s) -
Xu Xu,
Watts Alison,
Reed Markum
Publication year - 2019
Publication title -
growth and change
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.657
H-Index - 55
eISSN - 1468-2257
pISSN - 0017-4815
DOI - 10.1111/grow.12334
Subject(s) - the internet , download , internet access , broadband , exploit , dissemination , business , negative binomial distribution , poisson regression , construct (python library) , marketing , telecommunications , poisson distribution , computer science , statistics , mathematics , computer security , world wide web , population , demography , sociology , programming language
Access to the Internet is an essential determinant of innovation, which has received little attention in the literature. This paper emphasizes the role of Internet accessibility in lowering information costs and therefore boosting regional innovation activity. We construct a simple theoretical model to illustrate the positive impact of decreased discovery costs, proxied by the accessibility of the Internet, on innovation. To test this hypothesis, we exploit a county‐level data set in the U.S. and run three types of regression with and without instruments: OLS, negative binomial, and Poisson. Within each method, we employ four levels of download speeds. We find a positive relationship between the access to the Internet and the number of patents filed in that specific county. This effect is particularly strong in the case of access to download speeds of 10 Mbps. Our analysis suggests that access to the Internet lowers information disseminating costs and therefore encourages more patents filed in the county. The results also indicate that access to the Internet matters more than faster Internet speed for innovation. Policy implications for these results suggest that if there were a minimum Internet access initiative, there could potentially be a significant increase in innovation by the U.S.