Does the Internet Affect the Pricing of New Cars to Women and Minorities?
) (Anderson School of Management) Abstract Mediating transactions through the Internet removes important cues that salespeople can use to assess a consumer’s willingness to pay. We analyze whether dealers’ difficulty in identifying consumer characteristics on the Internet and consumers’ ease in finding information affect race and gender discrimination in car retailing. Using a large dataset of transaction prices for new automobiles, the first part of the paper analyzes the relationship between car prices and demographics. We find that offline African-American and Hispanic consumers pay approximately 2% more than do other consumers; however, we can explain 65% of this price premium with differences in income, education, and search costs; we find no evidence of statistical race discrimination. The second part of the paper turns to the role of the Internet. Online minority buyers who use the Internet Referral Service we study, Autobytel.com, pay nearly the same prices as do whites, irresp
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