Publications
Publications
- June 2025
- Journal of Finance
Collusion in Brokered Markets
By: John William Hatfield, Scott Duke Kominers and Richard Lowery
Abstract
High commissions in the U.S. residential real estate agency market present a puzzle for economic theory because brokerage is not a concentrated industry. We model brokered markets as a game in which agents post prices for customers and then choose which other agents to work with. We show there exists an equilibrium in which each agent conditions working with other agents on those agents’ posted prices. Resulting prices can be appreciably higher than the competitive level (for a fixed discount factor), regardless of the number of agents. Thus, brokered markets can remain uncompetitive even with low concentration and easy entry.
Keywords
Real Estate Agents; Real Estate; Realtors; Broker Networks; Brokerage; Brokerage Commissions; ＂Brokerage Industry; Brokered Markets; Brokering; Brokers; Industrial Organization; Repeated Game Framework; ＂Repeated Games＂; Collusion; Antitrust; Microeconomics; Market Design; Theory; Game Theory; Real Estate Industry
Citation
Hatfield, John William, Scott Duke Kominers, and Richard Lowery. "Collusion in Brokered Markets." Journal of Finance 80, no. 3 (June 2025): 1417–1462.