Does the proliferation of smartphones reduce consumer search costs? The case of the Korean gasoline market

Abstract

This study treats the introduction of smartphones and access to the Korean gasoline market as a natural experiment, investigating how they affect consumer search costs. We estimate consumer search costs in different regional districts in Seoul and examine how smartphone proliferation affects search costs. Our findings indicate that the widespread use of smartphones reduced consumer search costs, and this reduction was more significant in districts with higher competition across firms. We can also infer that reduced search costs narrowed the market's dispersion of prices and markups.