Type
Working paper
Title
Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France
In
Sciences Po Economics Discussion Papers
Author(s)
MAGOUYRES Clément - Ecole d'Économie de Paris - Paris School of Economics (PSE) (Author)
MAYER Thierry - Département d'économie (Author)
MAZET Clément - Département d'économie (Author)
Editor
Paris : Département d'économie de Sciences Po
Collection
Sciences Po Economics Discussion Papers : 2019-10
Keywords
Internet, Trade, Imports, Consumer welfare
Abstract
EN
In this paper, we document the presence of “technology-induced” trade in France between 1997 and 2007 and assess its impact on consumer welfare. We use the staggered roll-out of broadband internet to estimate its causal effect on the importing behavior of affected firms. Using an event-study design, we find that broadband expansion increases firm-level imports by around 25%. We further find that the “sub-extensive” margin (number of products and sourcing countries per firm) is the main channel of adjustment and that the effect is larger for capital goods. Finally, we develop a model where firms optimize over their import strategy and which yields a sufficient statistics formula for the quantification of the effects of broadband on consumer welfare. Interpreted within this model, our reduced-form estimates imply that broadband internet reduced the consumer price index by 1.7% and that the import-channel, i.e. the enhanced access to foreign goods that is allowed by broadband, accounts for a quarter of that effect.

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