Further Assessment of the Efficiency Effects of Internet Use in Home Search

This paper examines Internet usage and the effect on buyer search efficiency using a two-stage Heckman procedure. Results indicate that as Internet usage increased, search duration increased, which differs from earlier research that found that the Internet had no significant effect on search duration, even though it increased search intensity. This study finds that the Internet increased buyer search intensity when market conditions were favorable for buyers. If the only effect of online search is an increase in search duration without a commensurate increase in benefits to buyers, the Internet may slow the market clearing process and increase seller holding costs.