Internet Car Retailing

Fiona Scott Morton, Florian Zettelmeyer and Jorge Silva‐Risso

Journal of Industrial Economics, 2001, vol. 49, issue 4, 501-519

Abstract: We investigate the effect of Internet car referral services on dealer pricing of automobiles in California. Customers of an online service pay on average 2% less for their car ($450 for the average car). 25% of the savings come from purchasing at low‐price dealerships affiliated with the online service. The remaining 75% stem from information provision by the online service, bargaining by the service on behalf of consumers, and cost efficiencies. A consumer receiving the mean online price does better than 65% of offline consumers, conditional on the car being purchased.

Date: 2001
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Journal of Industrial Economics is currently edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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