The digital divide and the growth of the hospitality industry: The case of Italian inner areas

We investigate the role of internet access in spurring tour- ism supply, a strategic driver of economic development, especially in the most ‘peripheral’ areas, characterized by a lack of technological infrastructure and other barriers that limit internet access and business opportunities. In a difference-in-differences setting, we exploit the recent Ital- ian strategy for ultra-broadband policy—aimed at boosting the diffusion of ultra-broadband in Italy since 2015—as an exogenous source of variation in internet access to estimate the effect on tourism supply. In doing so, we employ detailed data on broadband coverage and tourist accommo- dation at the municipality level from 2012 to 2019. Our results show that the ultra-broadband availability increased the tourism supply in four-star hotels and bed and break- fasts, suggesting that policy interventions aimed at reducing the digital divide between centers and peripheries can boost local economic development and help the process of de-peripheralization of marginal areas.