Economics Research Semianr | Weatherhead School at Case Western Reserve University

Economics Research Semianr

The Tragedy of the Last Mile: Congestion Externalities in Broadband Networks

Internet usage, mostly driven by increased demand for video, has been increasing at a fast rate. This growth has substantially constrained broadband networks, slowing down service, degrading quality and forcing service providers to search for solutions. We study the effectiveness of several such solutions. We utilize high frequency household-level data to estimate a (dynamic) model of daily usage during peak and off peak periods. In our setting, demand is dynamic because the plans are three parts tariffs: consumers pay a monthly fee, in exchange get a monthly allowance and pay a per GB fee for anything above that allowance. The dynamics generate variation in the shadow price of usage over the month as consumers are more or less likely to reach the allowance constraint. We use this shadow price variation, as well as variation in congestion due to network upgrades, to estimate consumers price and congestion sensitivity. We estimate the model allowing for a flexible distribution of heterogeneity. Using the model estimates, we calculate the welfare changes associated with different economic and technological solutions for reducing congestion, including peak-use pricing, throttling connectivity speeds, and
local-cache technologies.

Please join the Economics Department for a research seminar.  This event is open to all Case Western Reserve University faculty, Ph.D. students, economic majors and minors, and those interested in economics research.
Contact Information:

Teresa Kabat

Friday, April 21, 2017 from 12:30 p.m. to 2 p.m.
Peter B. Lewis Building, Room 258
11119 Bellflower Road
Cleveland, OH 44106-7235
United States
Speaker(s): Johathan Williams, Ph.D., University of North Carolina
Sponsored by: Economics Department
The Tragedy of the Last Mile


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