On optimal real estate commissions q
نویسندگان
چکیده
When real estate agent effort is unobservable, home sellers do not prefer the lowest possible commission rate because such a rate does not induce sufficient effort from agents. As a result, the optimal commission from the seller’s perspective exhibits downward rigidity, even if there is free entry. The analysis shows that downward rigidity will occur if and only if the quasi-fixed costs of selling a house are small. 2006 Elsevier Inc. All rights reserved. JEL classifications: D82; D86; L15; L85
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