publication . Article . 2002

Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry

Jeffrey R. Brown; Austan Goolsbee;
Open Access
  • Published: 01 Jan 2002 Journal: Journal of Political Economy, volume 110, issue 3 June, pages 481-507
Abstract
The Internet has the potential to significantly reduce search costs by allowing consumers to engage in low-cost price comparisons online. This paper provides empirical evidence on the impact that the rise of Internet comparison shopping sites has had for the prices of life insurance in the 1990s. Using micro data on individual life insurance policies, the results indicate that, controlling for individual and policy characteristics, a 10 percent increase in the share of individuals in a group using the Internet reduces average insurance prices for the group by as much as 5 percent. Further evidence indicates that prices did not fall with rising Internet usage for...
Subjects
free text keywords: The Internet, business.industry, business, Microdata (HTML), Economics, Microeconomics, Price dispersion, Empirical evidence, Search cost, Economic surplus, Insurance industry, Insurance policy
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