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Benefits Of Communications Infrastructure Capital In U.S. Economy

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  • M. Ishaq Nadiri
  • Banani Nandi

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.

Suggested Citation

  • M. Ishaq Nadiri & Banani Nandi, 2001. "Benefits Of Communications Infrastructure Capital In U.S. Economy," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 10(2-3), pages 89-107.
    • Handle: RePEc:taf:ecinnt:v:10:y:2001:i:2-3:p:89-107
    DOI: 10.1080/10438590100000005
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    References listed on IDEAS

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    1. Hardy, Andrew P., 1980. "The role of the telephone in economic development," Telecommunications Policy, Elsevier, vol. 4(4), pages 278-286, December.
    2. Surendra Gera & Wulong Wu & Frank C. Lee, 1999. "Information technology and productivity growth: an empirical analysis for Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 32(2), pages 384-407, April.
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    Cited by:

    1. Nadiri, M. Ishaq & Nandi, Banani & Akoz, Kemal Kivanc, 2018. "Impact of modern communication infrastructure on productivity, production structure and factor demands of US industries: Impact revisited," Telecommunications Policy, Elsevier, vol. 42(6), pages 433-451.
    2. M. Ishaq NADIRI & Banani NANDI, 2015. "Modern Communication Technology and its Economic Impact: A Survey of Research Findings," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(100), pages 125-144, 4th quart.

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    More about this item

    Keywords

    communications; infrastructure; network externality; marginal benefits; productivity; JEL Code D2; D24; LOO; L86; L96; 047;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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