Working Paper: CEPR ID: DP13847
Authors: Thierry Mayer; Clément Malgouyres; Clément Mazetsonilhac
Abstract: In this paper, we document the presence of ''technology-induced'' trade in France between 1997 and 2007 and assessits impact on consumer welfare. We use the staggered roll-out of broadband internet to estimate its causal effecton the importing behavior of affected firms. Using an event-study design, we find that broadband expansionincreases 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 effectis larger for capital goods. Finally, we develop a model where firms optimize over their importstrategy and which yieldsa sufficient statistics formula for the quantification of the effects of broadband onconsumer welfare. Interpreted within this model, our reduced-form estimates imply that broadband internet reducedthe 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.
Keywords: internet; trade; imports; consumer welfare
JEL Codes: F14; F15; F61; F66; L23; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Broadband expansion (L96) | Firm-level imports (F23) |
| Broadband expansion (L96) | Number of products and sourcing countries per firm (L25) |
| Broadband expansion (L96) | Consumer price index (E31) |
| Enhanced access to foreign goods (F10) | Consumer price index (E31) |