Theory and Policy Seminar, Series 216

National Academy of Development and Strategy (NADS), RUC

Theory and Policy Seminar, Series 216

International Trade in a Digital Era: The Case of US Movie Exports

Reported by: FAN Haichao (Institute of  World Economy Fudan University)

Moderator: LIU Qing (National Academy of Development and Strategy, Renmin University of China)

Time: Jun 11, 2025  15:30-17:00

Venue: Room 1133, 11th Floor, Lide Building

Abstract:

How does the digital era alter familiar features of international trade? We explore such questions using exports of US movies which have gone from physical films to digital files. Unsurprisingly, digitization reduces the gravity effect: A one-standard-deviation increase in digitization reduces the distance elasticity from -0.46 to -0.40. More interestingly, digitization weakens the Washington Apples effect: The average gap in the distance elasticities between top and bottom quality movies (those at the 10th and 90th percentiles of lMDb ratings) is 0.240; a one-standard-deviation increase in digitization reduces this gap by 0.11. Our results are robust to alternative measures of digitization and quality. This implies that producers of lower quality varieties benefit disproportionately from digitization.