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

62 Pages Posted: 30 Jul 2019

See all articles by Clément Malgouyres

Clément Malgouyres

Paris School of Economics (PSE); Institut des politiques publiques (PSE)

Thierry Mayer

Sciences Po

Clément Mazet

Banque de France

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Date Written: July 2019

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.

Keywords: consumer welfare, Imports, internet, Trade

JEL Classification: F14, F15, F61, F66, L23, O33

Suggested Citation

Malgouyres, Clément and Mayer, Thierry and Mazet, Clément, Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France (July 2019). CEPR Discussion Paper No. DP13847. Available at SSRN: https://ssrn.com/abstract=3428369

Clément Malgouyres (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Institut des politiques publiques (PSE) ( email )

48 boulevard Jourdan
Paris, 75014
France

Thierry Mayer

Sciences Po ( email )

Clément Mazet

Banque de France ( email )

Paris
France

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