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Information in the First Globalization: News Agencies and Trade

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  • Pierre Cotterlaz
  • Etienne Fize

Abstract

This paper documents the effect of information frictions on trade using a historical large-scale improvement in the transmission of news: the emergence of global news agencies. The information available to potential traders became more abundant, was delivered faster and at a cheaper price between countries covered by a news agency. Exploiting differences in the timing of telegraph openings and news agency coverage across pairs of countries, we are able to disentangle the pure effect of information from the effect of a reduction in communication costs. Panel gravity estimates reveal that bilateral trade increased by 30\% more for pairs of countries covered by a news agency and connected by a telegraph than for pairs of countries simply connected by a telegraph.

Suggested Citation

  • Pierre Cotterlaz & Etienne Fize, 2021. "Information in the First Globalization: News Agencies and Trade," Working Papers 2021-02, CEPII research center.
    • Handle: RePEc:cii:cepidt:2021-02
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    References listed on IDEAS

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    1. Luigi Pascali, 2017. "The Wind of Change: Maritime Technology, Trade, and Economic Development," American Economic Review, American Economic Association, vol. 107(9), pages 2821-2854, September.
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    6. Ejrnæs, Mette & Persson, Karl Gunnar, 2010. "The gains from improved market efficiency: trade before and after the transatlantic telegraph," European Review of Economic History, Cambridge University Press, vol. 14(3), pages 361-381, December.
    7. Bakker, Gerben, 2014. "How they made news pay: news traders’ quest for crisis-resistant business models," Economic History Working Papers 59304, London School of Economics and Political Science, Department of Economic History.
    8. Michel Fouquin & Jules Hugot, "undated". "Two Centuries of Bilateral Trade and Gravity data: 1827-2014," Vniversitas Económica 15129, Universidad Javeriana - Bogotá.
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    Cited by:

    1. Whelsy Boungou & Francis Osei-Tutu & Amara Zongo, 2024. "Democracy and Intra-Africa Trade," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(1), pages 70-90, March.
    2. Bjørnskov, Christian & Schröder, Philipp J.H., 2023. "Press freedom, market information, and international trade," European Journal of Political Economy, Elsevier, vol. 76(C).

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    More about this item

    Keywords

    Information; International Trade; Economic History; News Agency; First Globalization;
    All these keywords.

    JEL classification:

    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F10 - International Economics - - Trade - - - General

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