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Brokers’ contractual arrangements in the Manhattan residential rental market

Heski Bar-Isaac () and Alessandro Gavazza

Journal of Urban Economics, 2015, vol. 86, issue C, 73-82

Abstract: We bring new evidence to bear on the role of intermediaries in frictional matching markets and on how parties design contracts with them. Specifically, we examine two features of contracts between landlords and agents in the Manhattan residential rental market. In our data, 72 percent of listings involve exclusive relationships between landlords and agents (the remaining 28 percent are non-exclusive); and in 21 percent of listings, the landlord commits to pay the agent’s fee (in the other 79 percent, the tenant pays the agent’s the fee). Our analysis highlights that these contractual features reflect landlords’ concerns about providing agents with incentives to exert effort specific to their rental units and to screen among heterogeneous tenants.

Keywords: Brokers; Rental markets; Contracts; Exclusivity; Broker’s Fee; Screening (search for similar items in EconPapers)
JEL-codes: L14 L85 R31 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:juecon:v:86:y:2015:i:c:p:73-82

DOI: 10.1016/j.jue.2014.12.002

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