Paper by Abhishek Nagaraj: “The public sector provides many types of information, such as geographic and census maps, that firms use when making decisions. However, the economic implications of such information infrastructure remain unexamined.
This study estimates the impact of information from Landsat, a NASA satellite mapping program, on the discovery of new deposits by large and small firms in the gold exploration industry. Using a simple theoretical framework, I argue that public sector information guides firms on the viability of risky projects and increases the likelihood of project success.
This effect is especially relevant for smaller firms, who face higher project costs and are particularly deterred from engaging in risky projects. I test the predictions of this framework by exploiting idiosyncratic timing variation in Landsat coverage across regions. Landsat maps nearly doubled the rate of significant gold discoveries after a region was mapped and increased the market share of smaller, junior firms from about 10% to 25%.
Public information infrastructure, including mapping efforts, seem to be an important, yet overlooked, driver of private-sector productivity and small business performance…(More)”