POINT - COMPETITION AND VALUE-OF-SERVICE PRICING IN THE RESIDENTIAL REAL-ESTATE BROKERAGE MARKET

In this comment we react to the paler by John R. Schroeter, entitled ' 'Competition and Value-of-Service Pricing in the Residential Real Esta te Brokerage Market'': which was published in the Spring 1987 issue of the Quarterly Review of Economics and Business. This paper is cited a s one of the few papers that argues that the uniformity of the commiss ion rate that brokers charge, can be consistent with a market structur e in which brokers have no market power. However, we show that the mod el Schroeter developed does not give a stable equilibrium, unless one of the principal assumptions of the model is violated.