Concentration and Market Structure in Local Real Estate Markets |
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Authors: | Jason Beck Frank Scott Aaron Yelowitz |
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Institution: | 1. Department of Economics, Armstrong Atlantic State University, Savannah, GA 31419 or Jason.Beck@armstrong.edu.;2. Department of Economics, University of Kentucky, Lexington, KY 40506 or fscott@uky.edu.;3. Department of Economics, University of Kentucky, Lexington, KY 40506 or aaron@uky.edu. |
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Abstract: | The competitiveness of the residential real estate brokerage industry has attracted much attention. Anecdotal evidence suggests some local markets are concentrated, yet no systematic market structure study has been conducted. We collected cross‐sectional data on real estate brokers in 90 diverse markets across the United States and collected longitudinal data for Louisville, Kentucky. In medium and large markets, no evidence exists that market concentration might create problems for competition. Small markets, on average, have higher Herfindahl‐Hirschman Indexes than medium and large markets. The longitudinal data reveal that many small brokers sell a house or two one year and none the next year. |
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