Are Brokers' Commission Rates on Home Sales Too High? A Conceptual Analysis

Many people in North America believe that prevailing commission rates for residential real estate brokers are too high, even though such beliefs are not based on a formal model. This paper presents a general equilibrium model of the housing market in which real estate brokers serve as matching intermediaries. We use this model to construct an illustrative example which is calibrated using data consistent with a typical housing market. The example suggests that the commission rate which maximizes aggregate efficiency is considerably below the prevailing rate. Moreover, this finding appears to be robust to changes in the matching process.     

Marketing cooperative vs. commission agent: The Turkish dilemma on the modern fresh fruit and vegetable market

In Turkey, the Wholesale Markets Law was enacted in 1995 to facilitate small-scale growers’ access to the fresh produce market. Cooperatives and commission agents have thus become the main marketing structures available to small-scale fresh produce growers, to supply supermarkets and comply with their new requirements. In this paper, we question the advantages and disadvantages that confront small farmers with respect to those marketing structures to allow for market matching or quality upgrading. Drawing on ownership and transaction cost arguments, we use an analytical framework to identify and compare the costs of these marketing organizations. Based on data collected through a large number of interviews with stakeholders, we show that commission agents and credit cooperatives tend to be more efficient than traditional cooperatives as regards sales performance and decision costs. However, the lack of apparent competition between commission agents does not allow for sufficient provision of incentives for producers to invest in high-quality production. Consequently, credit cooperatives are the only structure progressively turning to strategies of quality upgrading and supermarket supply. The flipside of such strategies is that they may lead to the marginalization of small-scale farmers.     

The Welfare Effects of Non-Price Competition Among Real Estate Brokers

This paper examines the role of brokers in economizing on transaction costs in the housing market. By lowering the cost of transactions, brokers create welfare gains compared to a market in which buyers and sellers transact on their own. However, if brokers engage in unproductive, non-price competition to acquire a larger share of available listings, then some of the welfare gains are dissipated. Using a partial equilibrium model, this paper shows how an excessive commission rate can lead to this result.     

Another Look at Local Franchise Regulation and State Commission Regulation: Do They Really Matter?

While economic theories suggest that firm behavior may diverge over time under local franchise regulation and state commission regulation, empirical studies on that issue are scant. By exploiting the facts that: both types of regulation coexisted in the cable television industry prior to federal deregulation; and the starting years of cable systems varied widely, this paper approaches the issue. Two empirically testable hypotheses are set. First, market power exercised varies with system ages. Second, the age-dependent path of the market power exercised differs under local franchise regulation and state commission regulation. The paper finds evidence supporting these hypotheses. Though some qualifications are required due to the use of cross-sectional instead of panel data, the evidence presented here is highly suggestive that regulator-firm relations have played a role and might be a cause of the differing monopoly powers exercised.     

Multimarket contact and sales growth: evidence from insurance

Research on pricing, profits, and firm survival has shown that multimarket contact causes mutual forbearance against competition, but has not considered the consequences of imperfect observability of competitive moves. Here, predictions are developed to explain how mutual forbearance occurs—but sometimes fails—in markets with imperfect observability. Mutual forbearance means that firms do not seek to take market share from each other through price cuts or nonprice competition, and thus that sales grow at uniform rates. Firms defect from mutual forbearance, and hence have higher sales growth, if the potential rewards are high and the likelihood of being discovered is low. This theory is tested on a panel of firms operating in the Norwegian general insurance industry. The evidence suggests that sales growth is most rapid in firms that do not meet many multimarket competitors in a given market and firms that are economically troubled. Growing or highly concentrated markets have higher heterogeneity of growth rates. Copyright © 2007 John Wiley & Sons, Ltd.     

Intra-LATA toll elasticities

Regulatory commission hearings on intra-LATA toll competition have focused, for the purpose of revenue rebalancing, on the market elasticity of demand for intra-LATA toll service. This paper presents estimates of the intra-LATA toll elasticity based on a detailed model of residential customers' demand for short-haul service. The results are compared with those from other studies. The consensus of the studies indicates a residential elasticity of around -0.4.     

Non-Uniform Percentage Brokerage Commissions and Real Estate Market Performance

The effect of non-uniform commissions on the market duration of residential properties is ambiguous. While the broker's search effort is positively related to the size of the percentage commission, so is the seller's reservation price. Each of these relationships imply a time-on-market effect in the opposite direction of the other. A powerful statistical technique, survival regression, is employed to determine which relationship dominates. Because the probability that a property will sell at any given point in time is inversely related to the size of the percentage commission, we conclude that the negative search effects associated with low commission rates are more than offset by the positive reservation price effects.     

Do International Roaming Alliances Harm Consumers?

This paper develops a model of international roaming in which mobile network operators (MNO's) compete both on the wholesale market to sell roaming services to foreign operators and on the retail market for subscribers. To allow their subscribers to place or receive calls abroad, they have to buy roaming services provided by foreign MNO's. In the absence of international alliances, competition between foreign operators would drive wholesale unit prices down to marginal costs. However, international alliances are endogenously formed since they serve as a commitment device to soften competition on the retail market, leading to excessively high roaming per‐call prices.     

Electricity: Changes and Issues

This paper surveys recent developments in therestructuring and deregulation of the electric utilityindustry. New federal and state legislation isreviewed together with commission actions designed to carry out restructuring. The Department of Energy's highly controversial attempt to measure the netbenefits of electricity deregulation is noted, alongwith the response of DOE's critics. Five major factorsthat will affect the success or failure ofrestructuring and deregulation are examined at length. These include: growing industry concentration, theincreased risk premium attached to the market trading of electricity, the transition costs that will beincurred, the organization and governance of thetransmission network, and the adequacy of consumer and environmental protection in the new setting.     

Platform competition with free entry of sellers

We study platforms setting access prices and commissions on revenues of sellers engaged in monopolistic competition with free entry, such as the app providers on the app stores of Apple and Android devices. The link between prices on different sides induces the platforms to redistribute all the commission revenues through lower access prices and to set the optimal commission rates from the point of view of consumers, taking into account the pass-through on the prices of sellers, the elasticities of demand and surplus for their services and the elasticity of entry with respect to profitability. We discuss the role of heterogeneous sellers, substitutability between sellers’s products and limitations of the basic alignment of interest due to direct channels for sellers and consumer myopia.     

Does bridging the Internet Access Divide contribute to enhancing countries' integration into the global trade in services markets?

This paper examines the impact of countries' distance between their Internet usage and the world' average of the Internet usage intensity on their integration into the world market of trade in commercial services. Using an unbalanced panel dataset of 175 countries over the annual period 2000–2013, the empirical analysis indicates that the narrowing of the Internet-related distance would improve countries' integration into the world trade in commercial services market. Furthermore, it helps those countries that are geographically far from the world market to compensate for the adverse effect of this geographical distance on their integration into the world market of trade in commercial services.     

An antitrust analysis of non-profit hospital mergers

This paper considers such issues involved in non-profit hospital mergers as relevant product and geographic markets and the impacts of mergers on competition. The roles of non-price competition, entry barriers, and merger-generated efficiencies are considered. Close attention is given to the relevance of the Justice Department Merger guideline to the hospital industry. Through detailed examination of four litigated or challenged cases, the geographic market is shown to depend upon particular medical services. Outpatient services are found to comprise a separate market from inpatient hospital services, and non-profit status is determined to warrant the usual antitrust merger treatment.     

电力备用辅助服务的电价测算

分析了备用辅助服务的成本构成,指出了当前电力备用辅助服务存在的问题;针对我国电力市场处于初期阶段,尚未建立电力辅助服务市场的情况,设计了一种基于成本的备用辅助服务电价测算方法,并结合电网运行的实际情况。测算了电网备用辅助服务电价水平。测算备用辅助服务电价有助于推动备用辅助服务市场的建设,理顺对提供备用辅助服务电厂的经济补偿关系,调动各类电厂承担备用辅助服务的积极性。     

The Housing Market and Real Estate Brokers

The major development in this paper concerns the failure, in earlier studies, to consider interaction between alternative methods of arranging sales in the housing market. A seller may market a house by direct negotiations with buyers, without the intermediation of real estate brokers, or by listing the house with a broker. A rational seller would choose the option which offers the higher expected return on the house. In a sequence of models we argue that the seller's option of a method of sale induces competitive pressure in the choice of the commission rate by the broker. We also consider the split rate in a multiple listing system, ease of entry of brokers and the cartel hypothesis as applied to brokers. We conclude that the competitive pressure of direct negotiations between sellers and buyers, relative free entry of brokers and the inappropri-ateness of the cartel hypothesis cast serious doubt about a general consensus of opinion that the brokerage system is characterized by price fixing, excessive commissions and excessive marketing costs.     

大城市女性家居服市场及消费特征初探

本文基于上海服装市场,通过市场调查及消费者研究,对国内家居服消费者的消费行为特点进行了分析讨论,总结了消费者的生活状态和生活方式,以及他们在产品质量、款式、服务、价格等方面的消费特征和对购物环境和广告宣传形式的偏好,从而为国内家居服品牌产品开发和市场拓展提供了应对措施。     

Emerging capital markets: A case study of equity markets in Pakistan

The Pakistan financial system displays all the classic characteristics of an emerging market: market capitalisation amounts to only 5.5% of GNP; less than 0.3% of the population are shareholders, resources mobilised through the capital market are insignificant compared to that through the banking system, and equities account for about 4% of the assets of the financial system.The pricing of both equity and debenture capital is administratively set by the Government. This has resulted in the shares of well-managed companies being issued at below market clearing price. Consequently, new shareholders benefit at the expense of original shareholders. Underwriters are denied any useful function and underwriting commission does not reflect perceived issue risk.There is a paucity of stock of well-run companies. The market also suffers from inadequate information flow and faces some fundamental institutional weaknesses. If the share buying habit is to increase and if savings are to be channelled into financial markets, appropriate mechanisms need to be developed for both broker and investor protection.The views expressed in this paper are those of its authors and do not necessarily represent the opinions of the International Finance Corporation. The information presented here in has been obtained from sources believed to be reliable, but is not guaranteed as to completeness or accuracy.     

Innovation: A data-driven approach

A newly introduced product or service becomes an innovation after it has been proven in the market. No one likes the fact that market failures of products and services are much more common than commercial successes. A data-driven approach to innovation is proposed. It is a natural extension of the system of customer requirements in terms of their number and type and the ways of collecting and processing them. The ideas introduced in this paper are applicable to the evaluation of the innovativeness of planned introductions of design changes and design of new products and services. In fact, blends of products and services could be the most promising way of bringing innovations to the market. The most important toll gates of innovation are the generation of new ideas and their evaluation. People have limited ability to generate and evaluate a large number of potential innovation alternatives. The proposed approach is intended to evaluate many alternatives from a market perspective.     

What A National Commission on Neighborhoods Could Do

This paper addresses the problems to be faced by a national commission on neighborhoods. Legislation to create such a study group was introduced during the past year, in conjunction with renewed interest in neighborhood conservation and revitalization. However, there have been many earlier study groups that have already made most of the recommendations which might be expected from a new effort. The work of a new commission should therefore focus on the ways in which the study group conducts its activities. For instance, a new commission should explicitly assess existing programs (with a view toward reducing some of the less efficient or contradictory ones), should broaden its attempts to solicit the views of residents, should conduct advocate inquiries in addition to research analyses, should focus on the organizational problems of implementing any new recommendations, and should help neighborhoods to develop simple techniques for monitoring neighborhood change. This paper also points out some of the critical issues that any new study group must face, including the problem that the prime candidates for neighborhood preservation are not likely to be poverty neighborhoods. Therefore, neighborhood revitalization policies cannot easily serve both middle- and low-income constituents.     

Variety in the innovation process of UK research and development service firms

Research and development service firms (RDSFs) are a particular type of technology-based knowledge-intensive business services (KIBS). RDSFs provide clients with R&D services on a contract basis, and operate as knowledge intermediaries linking research and market. They are innovative in their own right, as well as supporting innovation efforts by their clients; they rely on their own innovation efforts to be competitive and to develop new value propositions for their clients. The present paper explores the innovation process in RDSFs, drawing on semi-structured interviews with founders and senior managers of 32 companies in the United Kingdom. Our findings suggest that RDSFs vary considerably in terms of their primary innovation drivers (i.e. whether they are mainly driven by market demands or by technological opportunities) and the outcomes they pursue (i.e. whether their outputs are mainly services to clients or a mixture of services and products and/or intellectual property). Four major orientations of RDSFs were identified: (i) technology-based innovation exploiters; (ii) science-focused innovation explorers; (iii) client-driven innovation integrators; and (iv) open innovation translators. This variety among firms normally belonging to the same, small subsector of KIBS, suggests the need for caution in generalising about behaviour in terms of such statistical groupings.     

Entering the mobile service market via mobile platforms: Qualcomm's BREW platform and Nokia's Preminet platform

The mobile telecommunication market has evolved from simple voice to multimedia services. In the past, the primary players in mobile services were local operators in different countries; international telecommunication vendors, such as Qualcomm and Nokia, were seldom involved in the mobile service market. In order to enter this market, Qualcomm and Nokia have separately introduced their mobile application platforms, called respectively BREW and Preminet. This paper examines how the two companies attempt to share the mobile service market through their mobile platforms and internationalized business models. This paper also analyzes their mobile platforms’ business models and their strategic implications.