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Quantitative Marketing and Economics

, Volume 1, Issue 1, pp 65–92 | Cite as

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

  • Fiona Scott Morton
  • Florian Zettelmeyer
  • Jorge Silva-Risso
Article

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.

race and gender discrimination price discrimination internet industrial organization automobile industry pricing 

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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Fiona Scott Morton
    • 1
    • 2
  • Florian Zettelmeyer
    • 3
    • 2
  • Jorge Silva-Risso
    • 4
  1. 1.School of ManagementYale UniversityNew Haven
  2. 2.National Bureau of Economic ResearchUSA
  3. 3.Haas School of BusinessUniversity of California, BerkeleyBerkeley
  4. 4.Anderson SchoolUniversity of California, Los AngelesLos Angeles

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