Asaf Zussman has a 2013 Economic Journal paper on this topic (pdf, gated), here is the abstract:
Using a combination of randomised field experiments, follow-up telephone surveys and other data collection efforts, this article studies the extent and the sources of ethnic discrimination in the Israeli online market for used cars. We find robust evidence of discrimination against Arab buyers and sellers which, the analysis suggests, is motivated by “statistical” rather than “taste” considerations. We additionall find the Arab sellers manipulate their identity in the market by leaving the name field in their advertisements blank.
That abstract could be more informative, here are some concrete results from the paper, noting that market participants do not wish to start a transaction which will then later end up cancelled:
1. Both questionnaire answers and market behavior show discrimination towards Arabs.
2. “The overall [seller] response rate to emails is 22% higher for the Jewish than for the Arab buyer.”
3. An Arab buyer offering a car’s posted price receives the same amount of response as a Jewish buyer requesting a 5-10% discount off the posted price.
4. Based on questionnaires, unfavorable attitudes towards Arabs are positively correlated with Jewish religiosity and negatively correlated with education.
5. Jewish questionnaire responses are correlated with actual marketplace discrimination against Arab transactors. This concordance of words and action is by no means always the case in other studies of discrimination.
6. Arab buyers discriminate against sellers from their own ethnic group, although not as much as Jews discriminate against Arab sellers.
7. The share of used car advertisements without seller name is 10.8% for Jewish sellers, 29.5% for Arab sellers, and 16.7% for sellers with “shared” names.
You will find ungated versions here, and for the pointer I thank Ben Southwood.