Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323536 
Year of Publication: 
2025
Citation: 
[Journal:] Review of Industrial Organization [ISSN:] 1573-7160 [Volume:] 66 [Issue:] 4 [Publisher:] Springer US [Place:] New York [Year:] 2025 [Pages:] 419-438
Publisher: 
Springer US, New York
Abstract: 
Abstract Inequality in access to health, education, and employment opportunities is exacerbated in developing nations due to the uneven distribution of access to high-speed internet connections. In Colombia, the government enacted a policy (in 2012) to subsidize internet fees for low-income households so as to bridge the digital divide. The reductions were not granted to all plans and thus created incentives for consumers to switch between plans. We estimate a structural model of demand for internet connection plans, which we use to quantify the importance of switching behavior. We estimate the model using data on plans that are offered by all internet service providers to households in all socioeconomic (SES) groups across Colombia. Our results indicate that the subsidy caused a non-negligible fraction of low-SES households to switch internet plans - the majority of which switched to plans with lower speeds, not higher speeds. Furthermore, the more wealthy households (of the lower SES groups) were twice as likely to switch plans than were those in the lowest SES group. Our findings suggest that the effect– not only on internet adoption but also on switching behavior– should be taken into account when formulating subsidies that are designed to bridge the digital divide.
Subjects: 
Digital divide
Internet access
Developing countries
Covid-19
Limited choice sets
Consumer switching behavior
Persistent Identifier of the first edition: 
Additional Information: 
L15;L51;L86;D12;D31
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version
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