Does the Internet make markets more competitive?

According to Jeffrey Brown of Harvard’s John F. Kennedy School of Government, the Internet’s power to allow consumers to engage in low-cost price comparisons online has affected the market for life insurance. Looking at data on individual life insurance policies, Brown found that 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. The results suggest that growth of the Internet has reduced term life prices by 8 percent to 15 percent and increased consumer surplus by $115-215 million per year and perhaps more.