The Effects of Competition and Information on Racial Discrimination: Evidence from a Field Experiment

John Nunley (), Mark Owens and R. Stephen Howard

No 201007, Working Papers from Middle Tennessee State University, Department of Economics and Finance

Abstract: We conduct a field experiment to determine whether racial discrimination can be identified in product-market auctions and, if so, under what conditions it is more likely to emerge. We compare the prices paid for perfectly substitutable products sold on eBay between sellers with distinctively white and distinctively black names. Price differences arise in favor of sellers whose names match the expected racial characteristics of buyers. However, the price differences only emerge in markets characterized by low levels of competition, and eBay's feedback system, which reduces asymmetric information between buyer and seller, is successful at mitigating these differences. The results suggest, rather strongly, that competitive forces and market mechanisms designed to reduce informational asymmetries both can aid in promoting non-discriminatory outcomes in markets.

Keywords: Racial Discrimination; Statistical Discrimination; Asymmetric Information; Competition; eBay (search for similar items in EconPapers)
JEL-codes: C93 D82 J15 (search for similar items in EconPapers)
Date: 2010-04
New Economics Papers: this item is included in nep-cta, nep-exp and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mts:wpaper:201007

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