Summary
We study the effects of the Internet on regional price differences. Comparing two Dutch regions, we find that before the rise of the Internet, price differences of used cars between those regions amounted to some 11–15%, controlling for mileage, age, fuel type and engine volume. These price differences have completely disappeared after the rise of the Internet, in particular a website that allows consumers to make detailed comparisons between almost all used cars for sale in the Netherlands.
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The authors thank two anonymous referees, Peter Kooreman, José Luis Moraga González, Linda Toolsema, Robert Veldman, Bjørn Volkerink, and participants at the 2005 NAKE Research Day, the 2006 EARIE conference, and seminars at the University of Groningen and the Utrecht School of Economics for useful comments.
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Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License (https://creativecommons.org/licenses/by-nc/2.0), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
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Haan, M.A., de Boer, HW. Has the Internet Eliminated Regional Price Differences? Evidence from the Used Car Market. De Economist 158, 373–386 (2010). https://doi.org/10.1007/s10645-010-9151-4
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DOI: https://doi.org/10.1007/s10645-010-9151-4