Abstract: This paper conducts a quasi-natural experiment based on the data trading platforms successively built since 2014. By making use of the panel data from 277 cities in China from 2011 to 2018, it constructs a difference-in-difference model to examine the influence of data element market construction characterized by the construction of data trading platforms on the development of urban digital economy. The findings show that the construction of the data element market has significantly promoted the development of urban digital economy, and that this conclusion is still significant after a series of robustness tests, such as parallel trend test, counterfactual test, and instrumental variable method, etc. In a short term, the construction of data element market has expanded the inter-regional digital gap. The mechanism analysis indicates that the construction of data element market has significantly promoted the development of urban digital economy through promoting the integrated development of the manufacturing industry and the service industries and improving the efficiency of capital and labor allocation. Further heterogeneity analysis reveals that the influence of the construction of data element market on the digital economic development has significant heterogeneity in terms of digital infrastructure, innovation capabilities, and government intervention.

Key words: data element market, digital economy, data trading platform, difference-in-difference