Abstract: According to the searching theory, this paper explored the effects of searching cost on equilibrium price and price dispersion following the variability of sellers’ reputation and network externalities. The results show that higher searching cost can make sellers with different reputation coexist in the online markets; in order to compete with the higher reputation sellers, sellers with lower reputation have to reduce the products price and thus leads to price dispersion; The increasing of network externalities can lead to more price dispersion. Furthermore, the advertisement by higherreputation sellers can improve buyers’ searching efficiency and reduce buyers’ searching activities. In order to compete with higherreputation firms, the lowerreputation sellers have to reduce the price and thus the price dispersion becomes more serious.