Premium
Real Estate Brokers, Nonprice Competition and the Housing Market
Author(s) -
Turnbull Geoffrey K.
Publication year - 1996
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00692
Subject(s) - commission , real estate , competition (biology) , economics , margin (machine learning) , database transaction , deadweight loss , microeconomics , quality (philosophy) , transaction cost , business , industrial organization , welfare , finance , market economy , epistemology , machine learning , computer science , biology , programming language , ecology , philosophy
Given a fixed commission rate and easy entry, economic profits must be competed away on some nonprice margin in the real estate brokerage market. This paper focuses on nonprice competition in the level or quality of services offered buyers and sellers in the market, examining the equilibrium adjustment process, comparative static predictions and efficiency implications. In contrast with earlier studies focusing on wasteful advertising, this paper demonstrates that higher commission rates can either increase or decrease deadweight loss, depending upon how broker services affect buyer and seller transaction costs.