Foreseeing Potential Trade Effects of Additive Manufacturing: Evidence from Trade in Sound Recordings

Additive manufacturing (AM), known as three-dimensional printing, has the potential to drastically change the mode of production and trade in goods. However, it is challenging to investigate the effects of AM on trade because existing AM production patterns are still immature. As an analogy for the impacts of AM, this study investigates the effects of internet distribution on trade in sound recordings, which has changed after the emergence of online shops or streaming services. Specifically, we estimate the gravity equation in the bilateral trade in sound recordings among 197 countries in 2003–2017 and demonstrate that internet penetration significantly decreases trade in sound recordings. Furthermore, the strong protection of intellectual property rights in importing countries weakens the trade-reducing effect, whereas that in exporting countries magnifies such an effect.