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Preprints, Working Papers, ... Year : 2019

Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France

Abstract

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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hal-03393079 , version 1 (21-10-2021)

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Clément Magouyres, Thierry Mayer, Clément Mazet-Sonilhac. Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France. 2019. ⟨hal-03393079⟩
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