BROKERAGE PRICING UNDER COMPETITION

This paper reexamines the popular assumption that real estate commissi ons are fixed over time. It shows how the competitively determined com mission rate responds to changes in the housing market and broker cost conditions. One testable implication is that competition promotes cou nter-cyclical changes in the commission rate. The empirical analysis o f commission rate determinants using data covering an entire urban hou sing market through its downturn and expansion phases reveals the coun ter-cyclical movement in commission rates predicted by the competitive model. (C) 1997 Academic Press