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Low-Income Demand for Local Telephone Service: Effects of Lifeline and Linkup

Author

Listed:
  • Daniel Ackerberg

    (Economics Department, University of Arizona)

  • Michael Riordan

    (Department of Economics, School of Arts and Sciences, Columbia University
    Finance & Economics Department, Graduate School of Business, Columbia University)

  • Gregory Rosston

    (Stanford Institute for Economic Policy Research, Stanford University)

  • Bradley Wimmer

    (Department of Economics, St. Lawrence University)

Abstract

This study evaluates the effect of the “Lifeline” and “Linkup” subsidy programs on telephone penetration rates of low-income households. It is the first to estimate low-income telephone demand across demographic groups using location-specific Lifeline and Linkup prices. The demand specifications use a discrete choice model aggregated across demographic groups. GMM estimators correct for the possible endogeneity of subsidized prices. A simulation predicts low-income telephone penetration would be 4.1 percentage points lower without Lifeline and Linkup. Results suggest that Linkup is more cost-effective than Lifeline, and that automatic enrollment in the programs increases penetration.

Suggested Citation

  • Daniel Ackerberg & Michael Riordan & Gregory Rosston & Bradley Wimmer, 2009. "Low-Income Demand for Local Telephone Service: Effects of Lifeline and Linkup," Discussion Papers 08-047, Stanford Institute for Economic Policy Research, revised Aug 2009.
    • Handle: RePEc:sip:dpaper:08-047
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    References listed on IDEAS

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    Cited by:

    1. Ackerberg, Daniel A. & DeRemer, David R. & Riordan, Michael H. & Rosston, Gregory L. & Wimmer, Bradley S., 2014. "Estimating the impact of low-income universal service programs," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 84-98.
    2. Carlos Perez Montes, 2012. "Regulatory bias in the price structure of local telephone services," Working Papers 1201, Banco de España.
    3. Nicholas Bloom & Renata Lemos & Raffaella Sadun & John Van Reenen, 2015. "Does Management Matter in schools?," Economic Journal, Royal Economic Society, vol. 0(584), pages 647-674, May.
    4. Biancini, Sara, 2011. "Behind the scenes of the telecommunications miracle: An empirical analysis of the Indian market," Telecommunications Policy, Elsevier, vol. 35(3), pages 238-249, April.
    5. Ying Fan & Mo Xiao, 2015. "Competition and subsidies in the deregulated US local telephone industry," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 751-776, October.
    6. Gregory L. Rosston & Scott J. Savage & Bradley S. Wimmer, 2006. "The Impact of "Deregulation" on Regulator Behavior: An Empirical Analysis of the Telecommunications Act of 1996," Discussion Papers 05-006, Stanford Institute for Economic Policy Research.
    7. Pérez Montes, Carlos, 2013. "Regulatory bias in the price structure of local telephone service," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 462-476.
    8. Holt, Lynne & Galligan, Mary, 2013. "Mapping the field: Retrospective of the federal universal service programs," Telecommunications Policy, Elsevier, vol. 37(9), pages 773-793.

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    More about this item

    Keywords

    telephone subsidies; low-income telephone usuers;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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