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Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets?

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  • Banu Demir
  • Beata Javorcik
  • Piyush Panigrahi

Abstract

This paper explores how improved internet infrastructure impacts supply chains and economic activity, focusing on Türkiye. Using the expansion of fiber-optic networks and firm-to-firm transaction data, we find that better connectivity shifts input sourcing to well-connected regions and diversifies sup plier networks. We estimate a spatial equilibrium model with endogenous network formation and rational inattention and find that high-speed internet reduced information acquisition and communication costs. Enhanced connectivity increased real income by 2.2% in the median province. Our findings underscore the importance of digital infrastructure investments in fostering economic growth by improving supply chain efficiency and broadening firms’ access to suppliers.

Suggested Citation

  • Banu Demir & Beata Javorcik & Piyush Panigrahi, 2024. "Breaking Invisible Barriers: Does Fast Internet Improve Access to Input Markets?," Economics Series Working Papers 1061, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:1061
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    References listed on IDEAS

    as
    1. Andrew B. Bernard & Emmanuel Dhyne & Glenn Magerman & Kalina Manova & Andreas Moxnes, 2022. "The Origins of Firm Heterogeneity: A Production Network Approach," Journal of Political Economy, University of Chicago Press, vol. 130(7), pages 1765-1804.
    2. Filip Matêjka & Alisdair McKay, 2015. "Rational Inattention to Discrete Choices: A New Foundation for the Multinomial Logit Model," American Economic Review, American Economic Association, vol. 105(1), pages 272-298, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F15 - International Economics - - Trade - - - Economic Integration
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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