Forthcoming in AEJ: Microeconomics: "The Benefits from Bundling Demand in K-12 Broadband Procurement" by Gaurab Aryal, Pallavi Pal, Charles Murry, and Arnab Palit.
(Forthcoming Article) - We study a new market design for K-12 broadband procurement that switched
from school-specific bidding to a system that bundled schools into groups. Using
an event study approach, we estimate that this program reduced internet prices
by $9.17 (55%) per Mbps per month while increasing bandwidth by 380.06 Mbps
(136%). These benefits resulted primarily from mitigating exposure risk—the possibility
that providers win too few contracts to cover their fixed infrastructure costs.
We document participants’ potential savings of $1.61–$3.48 million relative to their
$2.47 million E-rate subsidy.
