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The impact of minimum services laws on real estate brokerage competitive intensity

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Clapp, J. M., Nanda, A. and Pancak, K. A., (2011) The impact of minimum services laws on real estate brokerage competitive intensity. Working Papers in Real Estate & Planning . 12/11. Working Paper. University of Reading , Reading. pp37.

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Abstract/Summary

As many as fourteen US states have now mandated minimum service requirements for real estate brokerage relationships in residential transactions. This study attempts to determine whether these minimum service laws have any impact on brokerage competition. Federal government agencies allege such laws discourage competition because they limit the offering of nontraditional brokerage services. However, alternatively, a legislative “bright line” definition of the lowest level of acceptable service may reduce any perceived risk in offering non-traditional brokerage services and therefore encourage competition. Using several empirical strategies and state-level data over nine years (2000-08), we do not find any consistent and significant impact (positive/negative) of minimum services laws on number of licensees per 100 households, our proxy for competition. Interestingly, we also find that association strength, as measured by Realtor association membership penetration, has a strong deterring effect on competition.

Item Type:Report (Working Paper)
Divisions:Henley Business School > Real Estate and Planning
ID Code:22731
Uncontrolled Keywords:Brokerage, Competition, Minimum Services, Dynamic Panel
Publisher:University of Reading
Publisher Statement:The copyright of each working paper remains with the author. If you wish to quote from or cite any paper please contact the appropriate author; in some cases a more recent version of the paper may have been published elsewhere.

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