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

Author(s): Cl�ment Malgouyres, Thierry Mayer and Cl�ment Mazet

Publication Date: July 2019

Keyword(s): consumer welfare, Imports, internet and Trade

Programme Area(s): International Trade and Regional Economics

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.

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Bibliographic Reference

Malgouyres, C, Mayer, T and Mazet, C. 2019. 'Technology-induced Trade Shocks? Evidence from Broadband Expansion in France'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13847