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

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  • Clément Magouyres

    (Ecole d'Économie de Paris - Paris School of Economics (PSE))

  • Thierry Mayer

    (Département d'économie)

  • Clément Mazet

    (Département d'économie)

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.

Suggested Citation

  • Clément Magouyres & Thierry Mayer & Clément Mazet, 2019. "Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France," Sciences Po Economics Discussion Papers 2019-10, Sciences Po Departement of Economics.
  • Handle: RePEc:spo:wpecon:info:hdl:2441/4b7tooefh48jlq7oktt0tbn8om
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    2. Wache, Benjamin, 2021. "Information Frictions, Global Capital Markets, and the Telegraph," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242444, Verein für Socialpolitik / German Economic Association.
    3. Gigout, Timothee, 2019. "Firm dynamics in an global and uncertain economy," MPRA Paper 96569, University Library of Munich, Germany, revised 16 Oct 2019.
    4. Zhiyuan Chen & Aksel Erbahar & Yuan Zi, 2019. "Made and Created in China: Super Processors and Two-way Heterogeneity," Tinbergen Institute Discussion Papers 19-080/VI, Tinbergen Institute.

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    More about this item

    Keywords

    Internet; Trade; Imports; Consumer welfare;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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