Research Note - Migration of Service to the Internet: Evidence from a Federal Natural Experiment

Previous research into consumer choice of service channels studied the impact of online access as an addition to conventional service. Here, we study the impact of a compulsory migration to an online channel. We exploit a natural experiment in the implementation of a new federal government service to identify the causal effect of access channel on consumer choice. The government served western states through the Internet and telephone at all times. However, for the first 10 days, the government served the East through the Internet only. Comparing consumer responses in the East only Internet service available and West both Internet and telephone service available, we find robust evidence that some consumers preferred telephone access. The unavailability of telephone service in the first 10 days resulted in a 4.3% loss of consumers who were otherwise interested in the service.