Three Essays on Internet Platform Usage and Trade
Creators: name: Koten, Emine Elcin
Publisher: name: American University
Year: 2023

description: In the last decade the key driver of e-commerce growth has been the expansion of internet access. Studies indicate that the internet is transforming both the production and the consumption of goods and services in the domestic and international markets. Internet platform usage has significantly decreased the barriers for firms to communicate with foreign clients and suppliers on their international market participation. Using the internet platform for marketing intelligence enables firms to access information about the external environment at a faster rate and lower cost. The internet has the potential to reduce market-specific fixed entry costs because suppliers can more easily find information about new markets and can also advertise to numerous buyers at once (Freud and Weinbold 2004). However, only few studies have studied the linkage between firm’s internet platform usage and its foreign market participation. Thus, this dissertation adds to the limited literature by examining how using the internet platform can affect firm’s participation in global markets. The first two essays study the impact that internet platform usage (e-mail use, website use, and online sales use) types have on firms’ export and intermediate input import propensity and intensity, respectively, by using the Enterprise Survey dataset from the World Bank for Turkey. The main contribution of these essays to the literature is that I developed theoretical models to explain how using the internet platform increases exports and intermediate input imports. Even though exporting and importing decisions may be related, I believe that the underlying consideration by firms are fundamentally different. Hence, in the first essay, I use a theoretical framework introduced by Melitz (2003) to identify the export difference between a firm that uses the internet platform and a firm that does not. Similar to the selection effect in the first essay, I create another model in the second essay by following Antras and Helpman (2004) in which costs to access foreign markets decrease due to internet platform usage. I also add in both essays that fixed cost of internet adoption is firm-specific due to heterogeneity in the firm’s ability to access the internet. Therefore, fixed costs may vary across firms due to differences in geographical access to telecommunication infrastructure. In the first essay, results show that all three types of internet platform usage have a positive impact on both the likelihood of exports and export intensity. These results are robust after including instrumental variables (internet connection and internet outages) to control for the endogeneity in the telecommunication costs. In the second essay, similar results are received for the impact of the internet platform usage on intermediate input imports propensity and intensity. Results indicate that e-mail use, website use, and online sales use by firms increases their probability of importing inputs, with online sales use having the largest impact on import propensity and import intensity. Similarly, once instrumental variables are included to solve the endogeneity issue, estimates received are robust after controlling for self-selection bias. In addition, in both essays, a series of robustness checks shows that the results do not change much under alternative model specifications such as subset classification, Rauch classification and TiVA classification. In many countries there has been a growing interest in the gender aspect of international trade policies. Therefore, the third essay contributes to the gender in international trade literature by examining the potential channels through which internet platform usage can improve women’s participation in export markets. However, there is no other study that empirically examines the relevance of internet platform usage for increasing women’s participation in international trade in developing countries. Hence, in the third paper, I suggest that the internet platform usage will lower the discrimination barriers for women when entering the foreign markets and make accessing global markets easier for women-headed firms. Hence, women-headed firms which use the internet platform will have a higher propensity to export than other firms. Finally, results in the third essay show that the impact of internet platform usage differ for women-headed firms likelihood to export and export intensity. While e-mail use, website use, and online sales use have a positive impact on women-headed firms export propensity compared to men-headed firms, online sales use has the same positive impact on both men- and women-headed firms export propensity. In addition, results also indicate that the impact of the internet platform usage types is higher on women-headed firms export intensity than men-headed firms export intensity. When the endogeneity problem is solved, however, results illustrate that only online sales use has a lower impact on women-headed firms both export propensity and export intensity compared to the impact on men-headed firms exports. Robustness and sensitivity checks confirm only some of the findings.