Press freedom, market information, and international trade

We consider a framework in which freedom of the media can alleviate barriers to trade, while in the absence of trustworthy market information, firms optimally withhold part of their export activity and opt for testing-the-waters strategies. We employ data on export flows among a large group of Western and Latin American countries combined with the Freedom House measure of press freedom to examine the main theoretical implication. In a standard set-up of gravity equations, we find evidence that the effects are partially conditional on the political institutions of the importing country: press freedom is strongly associated with trade with autocracies. •We illustrate theoretically how freedom of the media can affect international trade.•Without media freedom firms optimally withhold part of their export activity.•We combine data on export flows with the Freedom House measure of press freedom.•We employ export flows among a group of Western and Latin American countries.•Findings show that press freedom is negatively associated with trade with autocracies.