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Using data from surveys of automobile buyers collected in 1990 and 2000 in a natural experiment setting, the authors study the determinants of use of the Internet as a source of information on automobiles, its impact on the use of other sources, and its impact on total search effort. The results indicate that the Internet draws attention in approximately the same proportion from other sources. The results also show that those who use the Internet to search for automobiles are younger and more educated and search more in general. However, the analysis also indicates that they would have searched even more if the Internet had not been present.

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It has been hypothesized that the online medium and the Internet lower search costs and that electronic markets are more competitive than conventional markets. This suggests that price dispersion of an item with the same measured characteristics across sellers at a given point in time for identical products sold by e-tailers online should be smaller than it is offline, but some recent empirical evidence reveals the opposite. Based on an empirical analysis of 105 e-tailers comprising 6,739 price observations for 581 items in eight product categories, the authors show that online price dispersion is persistent, even after controlling for e-tailer heterogeneity. The general conclusion is that the proportion of the price dispersion explained by e-tailer characteristics is small. Also, after controlling for differences in e-tailer service quality, prices at pure-play e-tailers are equal to or lower than those at bricks-andclicks e-tailers for all categories except books and computer software.