Offline and Online Search in Used Durables Markets

• We examine how searches in online and offline sources are interrelated in used markets.
• We test whether prior theory extends to used car purchases.
• We find that for used cars, dealer websites are complementary to dealer visits.
• The above finding is contrary to findings in the existing research.
• Search on resale websites, however, is a substitute for dealer visits.

This study examines how different information sources are used by consumers prior to their purchase of used durable goods, specifically used cars. We examine how online and offline search are related. Categories of online sources are dealer websites and resale websites, and of offline sources are print media and dealer visits. Prior research on new car purchases finds that online sources substitute for traditional, offline sources such as dealer visits. We examine whether this theory extends to used-car purchases and distinguish between dealer websites and resale websites (a distinction relevant to used-goods markets) by collecting data from a sample of used-car buyers. Because search in different sources can be interrelated, and due to data censoring, we build and estimate a simultaneous equations Tobit model. In contrast to existing research, we find that online search on dealer websites is complementary to and not a substitute for dealer visits. This complementary effect highlights the importance of dealers’ web presence in used markets.

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