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Do Laws Influence the Cost of Real Estate Brokerage Services? A State Fixed Effects Approach
Author(s) -
Nanda Anupam,
Clapp John M.,
Pancak Katherine A.
Publication year - 2015
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 - 10.1111/1540-6229.12124
Subject(s) - unbundling , real estate , competition (biology) , state (computer science) , service (business) , panel data , economics , business , law and economics , industrial organization , microeconomics , finance , econometrics , economy , computer science , algorithm , biology , ecology
A FTC‐DOJ study argues that state laws and regulations may inhibit the unbundling of real estate brokerage services in response to new technology. Our data show that 18 states have changed laws in ways that promote unbundling since 2000. We model brokerage costs as measured by number of agents in a state‐level annual panel vector autoregressive framework, a novel way of analyzing wasteful competition. Our findings support a positive relationship between brokerage costs and lagged house price and transactions. We find that change in full‐service brokers responds negatively (by well over two percentage points per year) to legal changes facilitating unbundling.