Bringing More Competition to Real Estate Brokerage

This paper provides an economic analysis of the residential real estate brokerage industry. We find that the traditional model for residential real estate brokerage services may be dated, and could be improved substantially with some public policy interventions that spur innovation. We believe that there are numerous barriers to entry that are slowing the emergence of new models for serving consumers. Some of these barriers are likely to be anti-competitive. Examples include discrimination against new brokerage models and online brokers who wish to join multiple listing services; state legislation that would require minimum service requirements, effectively preventing "a la carte" offerings; and prohibitions by real estate commissions on providing rebates to customers. In our opinion, none of these practices should be allowed. We offer three broad policy recommendations: First, federal and state antitrust authorities should carefully scrutinize efforts to limit competition in the residential real estate brokerage market. Second, state governments should refrain from adopting laws or rules that inhibit competition in real estate brokerage. Third, Congress should allow the Federal Reserve Board and the Treasury Department to permit banks, which have long been natural potential entrants into this business, to offer residential real estate brokerage services through separately capitalized affiliates. We do not know which business models are likely to succeed in the marketplace for residential real estate services in the future. We do believe, however, that judicious public policy interventions could have a marked impact on improving services and lowering costs for home buyers and sellers. Click Here for a shorter version of this paper, published in The Milken InstituteReview .

AN EMPIRICAL ANALYSIS OF REPUTATION EFFECTS AND NETWORK CENTRALITY IN A MULTI-AGENCY CONTEXT

Signals convey information to marketplace participants regarding the unobservable quality of a product. Whenever product quality if unobservable prior to purchase, there is the risk of adverse selection. Problems of hidden information also occur in the consumer marketplace when the consumer is unable to verify the quality of a good prior to purchase. The sending, receiving, and interpretation or signals are potential ways to overcome the problem of adverse selection. In general, there is a lack of empirical evidence for signaling hypothesis, particularly that which links signaling to business performance outcomes. This research proposes that reputation serves as a marketplace signal to convey unobservable information about products offered for sale. Signaling hypotheses are tested in a network context, examining the influence of signals throughout a network of buyers and sellers in a marketplace. There are many situations where a signal does not affect just one sender and one receiver; multiple constituencies may be aware of and react to a given signal. This study incorporates the actions of seller side principals, seller side agents, and buyer side agents when examining marketplace signals and provides a new perspective and better vantage point from which to test signaling theory. The research setting for this study is the world’s largest individual marketplace for Thoroughbred yearlings. Several sources of secondary data are employed. These openly available published sources of information were selected as representative of the information that would typically be available to marketplace principals and agents to use in planning interactions in this unique live auction marketplace. The findings from his study indicate that the reputation of seller side principals and agents affect the eventual business performance outcomes as measured by final price brought at auction for goods. Specifically, seller side principals and agents who have developed a reputation for producing or selling high-priced or high-performing goods will be rewarded in the marketplace with relatively higher prices for their goods. Buyer side agents who are more central in the marketplace will pay relatively higher prices for goods. Evidence suggests that more central seller side agents will receive relatively higher prices for their goods

Lessons from the Small Business Health Options Program: The SHOP Experience in California and Colorado

The Small Business Health Options Program (SHOP) got off to a slow start, with lower-than-expected enrollment and a public perception problem. This report examines California and Colorado's small-business marketplaces, which opened on schedule in October 2013. For business owners, employee choice was the most important reason cited for considering SHOP, with ease of administration a distant second. Several owners see SHOP as a viable alternative to the private exchanges now taking root among large and midsize employers. Interviews also revealed that business owners consider insurance brokers to be an important source of enrollment assistance. Those in the insurance and policy communities perceived small-business owners to be poorly informed about available tax credits; business owners disagreed, saying the credits were simply not key to their decision to elect SHOP. Potential growth areas for SHOP include developing alternative benefit designs, contracting with Medicaid plans, and offering ancillary products, such as wellness programs

Visitor and firm taxes versus environmental options in a dynamical context

The main objective of the paper is to analyze the effects on economic agents’ behavior deriving from the introduction of financial activities aimed to environmental protection. The environmental protection mechanism we study should permit exchange of financial activities among citizens, firms, and Public Administration. Such a particular “financial market” is regulated by the Public Administration, but mainly fuelled by the interest of two classes of involved agents: firms and dwelling citizens. We assume that the adoption process of financial decisions is described by a two-population evolutionary game and we study the basic features of the resulting dynamics.Environmental options; environment preserving technologies; evolutionary games; tourism

Amazon as a Seller of Marketplace Goods Under Article 2

You have probably purchased goods on Amazon. Did you know that if the goods you purchased on Amazon turn out to be defective and cause serious personal injury, Amazon is probably not liable for them? Did you know that even though you placed an order on Amazon, gave payment to Amazon, and received the goods in an Amazon box, there is a good chance that the goods are not “sold by” Amazon—but are instead sold by a third-party seller? Did you know that Amazon tries to avoid liability for goods sold on its platform on the technicality that it does not hold “title” to third-party seller goods, even though it promotes those goods online using Amazon branding, stores them in Amazon facilities, and delivers them in Amazon trucks? And did you know that the reason Amazon does not have title to those goods is because it unilaterally sets the title terms in its 68-page contract with thirdparty sellers? In this Article, I look at Amazon’s liability as a seller of unmerchantable goods under Article 2 of the Uniform Commercial Code. Thus far, litigants and courts have almost exclusively focused on Amazon’s liability in tort. I argue that there is a compelling argument that Amazon is liable for defective third-party goods because it is a merchant seller under § 2-314 of the Uniform Commercial Code. The biggest stumbling block to recovery under Article 2 is Amazon’s title argument. I deconstruct the title argument in detail, positing that Article 2 may not require the seller to hold title to ground liability, and, even if it does, it is not clear that Amazon does not have title to third-party goods in its possession. I also look specifically at a completely under-the-radar provision that should have a huge impact on Amazon’s title defense: the commingling clause in the Amazon Services’ Business Solutions Agreement. I maintain that this clause seriously undermines Amazon’s title argument and opens the door to Article 2 liability. This could be a game changer in terms of future litigation. I also broaden the lens beyond title to argue that Amazon casts itself in the role of seller with respect to all transactions on its platform. It does everything it can to convince buyers that they are purchasing from Amazon, not through Amazon. This is deliberately designed to capitalize on the trust that buyers place in the Amazon brand. Based on its degree of control over sales transactions and its efforts to hide the identity of the supposed “true seller,” Amazon should be equitably estopped from arguing that it is not a seller of third-party goods sold on its website