Internet and the Efficiency of Decentralized Markets: Evidence from Automobiles
12 Pages Posted: 21 Sep 2013
Date Written: April 14, 2013
Abstract
We estimate the effect of Internet on volume of trade in a major distributed marketplace. From 1997 to 2007, a period during which residential Internet use tripled, Internet increased the volume of used cars traded in California by 7.2 percent. This implies a substantial welfare gain due to reductions in market frictions. Additional gains may accrue when externalities are associated with the rate of vehicle fleet turnover (e.g. with respect to greenhouse gas emissions from fuel economy standards).
Keywords: Decentralized markets, transaction costs, information, Internet, automobiles
JEL Classification: D1, D8, L9
Suggested Citation: Suggested Citation