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

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

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

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%. The effect on domestic sales is positive but smaller, suggesting that the impact on trade is not limited to a scale effect. We further find that the “sub-extensive” margin (number of products and sourcing countries per firm) is the main channel of adjustment. Finally, we develop a model where firms optimize over their import strategy 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 2.22% and that the import-channel, i.e. the enhanced access to foreign goods that is allowed by broadband, accounts for about 33% of that effect.

Mots clés: Internet; Trade Imports; Consumer welfare

Domaines: Economies et finances

Clément Malgouyres, Thierry Mayer, Clément Mazet-Sonilhac. Technology-Induced Trade Shocks? Evidence from Broadband Expansion in France. Journal of International Economics, 2021, 133, ⟨10.1016/j.jinteco.2021.103520⟩. ⟨halshs-03325831⟩