In theory, price dispersion is attributed to consumer search costs and spatial difference. Therefore, a reduction in consumers’ search costs resulting from the development of internet should be expected to alleviate price dispersion. In this paper, we empirically examine the effects of the reduction of consumers’ search costs using a panel dataset on the Korean gasoline market. The panel covers sixteen major areas in Korea during 2008. After controling factors affecting price dispersion and price margin, we find that a reduction in consumers’ search costs decreases both price dispersion and margin in the metropolitan/capital areas.