Information Frictions, Internet, and the Relationship between Distance and Trade

Anders Akerman, Edwin Leuven and Magne Mogstad

American Economic Journal: Applied Economics, 2022, vol. 14, issue 1, 133-63

Abstract: We examine how the adoption of information communication technology affects bilateral trade. The context is a public program in Norway that rolled out broadband access points leading to plausibly exogenous variation in the availability and adoption of broadband by firms. We find that broadband makes trade patterns more sensitive to distance and economic size. These results are consistent with a model of trade with variable elasticity of demand. The model predicts that adoption of a technology that lowers information frictions enlarges the choice set of exporters and importers. This makes demand more elastic with respect to trade costs and thus distance.

JEL-codes: D83 F14 L86 O33 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (30)

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Working Paper: Information Frictions, Internet and the Relationship between Distance and Trade* (2020)
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DOI: 10.1257/app.20190589

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