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Consumer Information and Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?

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  • Fiona Morton
  • Florian Zettelmeyer
  • Jorge Silva-Risso

Abstract

Using a large dataset of automobile transaction prices, we find that offline African-American and Hispanic consumers pay approximately 2% more than do other offline consumers; however, we can explain 65% of this price premium with differences in observable traits such as income, education, and search costs. Our estimates of unexplained race premia are smaller than previous estimates in the literature. Online, we find that minority buyers pay nearly the same prices as do whites controlling for consumers' income, education, and neighborhood characteristics. These results are consistent with the Internet facilitating information search and removing cues to a consumer's willingness to pay. Our results imply that the Internet is particularly beneficial to those whose characteristics disadvantage them in negotiating. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Fiona Morton & Florian Zettelmeyer & Jorge Silva-Risso, 2003. "Consumer Information and Discrimination: Does the Internet Affect the Pricing of New Cars to Women and Minorities?," Quantitative Marketing and Economics (QME), Springer, vol. 1(1), pages 65-92, March.
    • Handle: RePEc:kap:qmktec:v:1:y:2003:i:1:p:65-92
    DOI: 10.1023/A:1023529910567
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    References listed on IDEAS

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    4. Fiona Scott Morton & Florian Zettelmeyer & Jorge Silva-Risso, 2001. "Internet Car Retailing," NBER Chapters, in: E-commerce, pages 501-519, National Bureau of Economic Research, Inc.
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