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Information, Social Media and International Trade Theory and Evidence Using Twenty Million Online Postings
We employ novel data and theoretical frameworks to investigate how a social media platform facilitates information exchange among firms. Our analysis is based on an extensive dataset comprising over 20 million firm-to-firm online interactions on a prominent social platform where participants share information about international trade. We document four empirical patterns. First, we find that firms’ exports grow significantly after the firm begins using the social media platform. Second, firms located geographically closer exchange more information. Third, firms in sectors that have stronger production network relationships interact more on the platform. Finally, firms in more developed regions are more likely to adopt the social media platform. Motivated by these empirical patterns, we develop a quantitative general equilibrium trade model with information frictions and endogenous learning and information sharing.
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