Free Trade, Fraught Tech: the impact of pilot free trade zone establishment on digital inequality within cities – evidence from China

In response to institutional innovation and economic transformation, a regional development model that combines policy pilots with the digital economy is emerging, bringing renewed attention to the challenge of digital inequality. Using a staggered difference-in-differences (DID) model and data from 279 prefecture-level and above cities in China from 2014 to 2023, this study investigates the impact of establishing Pilot Free Trade Zones (PFTZ) on intra-city digital inequality. The findings reveal that: (1) The establishment of PFTZs significantly increases digital inequality within cities; (2) This effect is further intensified by disparities in economic concentration, infrastructure investment, and financial development; (3) The impact is particularly evident in non-resource-based cities, transport hub cities, and digitally advanced cities; (4) PFTZs also aggravate digital inequality in neighboring cities, though this influence diminishes as the distance exceeds 400 km. This study contributes to the literature by expanding the understanding of the impact of trade liberalization policies on the digital divide, offering a fresh perspective on the intersection of institutional innovation and digital equity.