POINT - COMPETITION AND VALUE-OF-SERVICE PRICING IN THE RESIDENTIAL REAL-ESTATE BROKERAGE MARKET

In this comment we react to the paler by John R. Schroeter, entitled ''Competition and Value-of-Service Pricing in the Residential Real Estate Brokerage Market'': which was published in the Spring 1987 issue of the Quarterly Review of Economics and Business. This paper is cited as one of the few papers that argues that the uniformity of the commission rate that brokers charge, can be consistent with a market structure in which brokers have no market power. However, we show that the model Schroeter developed does not give a stable equilibrium, unless one of the principal assumptions of the model is violated.