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

Clément Malgouyres (1, 2, 3) , Thierry Mayer (4, 5, 6, 7) , Clément Mazet-Sonilhac (5, 7)

1 IPP - Institut des politiques publiques
2 PSE - Paris School of Economics
3 PJSE - Paris Jourdan Sciences Economiques
4 CEPII - Centre d'Etudes Prospectives et d'Informations Internationales
5 Centre de recherche de la Banque de France
6 CEPR - Center for Economic Policy Research
7 ECON - Département d'économie (Sciences Po)

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.

Domaines: Economies et finances

Clément Malgouyres, Thierry Mayer, Clément Mazet-Sonilhac. Technology-induced Trade Shocks? Evidence from Broadband Expansion in France. 2019. ⟨halshs-02160268⟩