A search model of rental markets: Who should pay the commission?
Andras Niedermayer and
Chengsi Wang ()
International Journal of Industrial Organization, 2018, vol. 58, issue C, 214-235
We develop a dynamic search equilibrium model of rental markets with brokerage fees. An endogenous mass of landlords and tenants is active in the search market. While the mass of entering tenants is exogenous, the mass of entering landlords is endogenously determined by the rate at which apartments become vacant. Brokerage fees paid by tenants are used as a device to screen short term and long term tenants. We analyze a policy that requires fees to be paid by landlords. Such a policy decreases efficiency by preventing efficient screening, but also increases turnover and hence efficiency in the search market. We further provide empirically testable implications of our theory.
Keywords: Search; Dynamic random matching; Brokerage fees; Appointment principle (search for similar items in EconPapers)
JEL-codes: D82 D83 R31 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:58:y:2018:i:c:p:214-235
Access Statistics for this article
International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal
More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().