Brokers' Contractual Arrangements in the Manhattan Residential Rental Market

33 Pages Posted: 22 Jan 2013 Last revised: 8 Dec 2014

See all articles by Heski Bar-Isaac

Heski Bar-Isaac

University of Toronto - Rotman School of Management

Alessandro Gavazza

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: December 1, 2014

Abstract

We bring new evidence to bear on the role of intermediaries in frictional matching markets and on 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.

Suggested Citation

Bar-Isaac, Heski and Gavazza, Alessandro, Brokers' Contractual Arrangements in the Manhattan Residential Rental Market (December 1, 2014). Rotman School of Management Working Paper No. 2205157. Available at SSRN: https://ssrn.com/abstract=2205157 or http://dx.doi.org/10.2139/ssrn.2205157

Heski Bar-Isaac

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416 978 3626 (Phone)

HOME PAGE: http://https://sites.google.com/site/heskibarisaac/home

Alessandro Gavazza (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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