Internet and the Efficiency of Decentralized Markets: Evidence from Automobiles
نویسندگان
چکیده
We estimate the effect of Internet on volume of trade in a major distributed marketplace. From 1997 to 2007, a period during which residential Internet use tripled, Internet increased the volume of used cars traded in California by 7.2 percent. This implies a substantial welfare gain due to reductions in market frictions of approximately $43 million per year relative to 1997 Internet penetration levels. Additional gains may accrue when externalities are associated with the rate of vehicle fleet turnover (e.g. with respect to greenhouse gas emissions from fuel economy standards). JEL: D1, D8, L9
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