Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2020
  • Working Paper
  • HBS Working Paper Series

Collusion in Brokered Markets

By: John William Hatfield, Scott Duke Kominers and Richard Lowery
  • Format:Print
  • | Language:English
  • | Pages:67
ShareBar

Abstract

The U.S. residential real estate agency market presents a puzzle for economic theory: commissions on real estate transactions have remained high for decades even though entry is frequent and costs are low. We model the real estate agency market, and other brokered markets, as a game in which brokers first post prices for customers and then choose which other agents to work with. We show that prices appreciably higher than the competitive level can be sustained (for a fixed discount factor) regardless of the number of brokers by using strategies that condition working with a broker on that broker’s posted prices.

Keywords

Real Estate; "Repeated Games"; Collusion; Antitrust; Brokered Markets; Game Theory; Real Estate Industry

Citation

Hatfield, John William, Scott Duke Kominers, and Richard Lowery. "Collusion in Brokered Markets." Harvard Business School Working Paper, No. 20-023, September 2019. (Revised July 2020.)
  • SSRN
  • Read Now

About The Author

Scott Duke Kominers

Entrepreneurial Management
→More Publications

More from the Authors

    • Harvard Business Review Digital Articles

    Why Build in Web3

    By: Jad Esber and Scott Duke Kominers
    • Bloomberg Opinion

    Why One Little Goof Drove Wordle Fans Nuts

    By: Scott Duke Kominers
    • Bloomberg Opinion

    The Failure of Covid.gov Is Worse Than Inexcusable

    By: Scott Duke Kominers
More from the Authors
  • Why Build in Web3 By: Jad Esber and Scott Duke Kominers
  • Why One Little Goof Drove Wordle Fans Nuts By: Scott Duke Kominers
  • The Failure of Covid.gov Is Worse Than Inexcusable By: Scott Duke Kominers
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College