Providing the best value to consumers: an efficiency analysis of durable goods markets across the evolution of the internet

Sonika Singh and Ellen Garbarino

Journal of Business Research, 2025, vol. 200, issue C

Abstract: This study investigates the change in technical efficiency of U.S. durable goods markets over a 25-year span, coinciding with the introduction and evolution of the Internet, using 21 categories evaluated in Consumer Reports. The Internet has facilitated easier and more cost-effective access to information regarding product quality and pricing. Economic theory posits that this enhanced capacity for information search should lead to increased market efficiency. Employing stochastic frontier analysis, this study utilizes longitudinal data to assess whether the rise of the Internet has coincided with an improvement in market efficiency. The findings indicate a significant reduction in deviations from the efficiency frontier over time, reflecting an improvement in market efficiency. A variety of market and product characteristics that affect the likelihood of information search (e.g., price and quality dispersion, market concentration, market complexity, Search/Experience/Credence classification, perceived risk, and Utilitarian/Hedonic classification) also predictably influence market efficiency.

Keywords: Market efficiency; Price-quality correlations; Stochastic frontier analysis; Information search (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:200:y:2025:i:c:s014829632500400x

DOI: 10.1016/j.jbusres.2025.115577

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