Collusion in Brokered Markets

67 Pages Posted: 10 Sep 2019 Last revised: 24 Jul 2020

See all articles by John William Hatfield

John William Hatfield

University of Texas at Austin

Scott Duke Kominers

Harvard University; a16z crypto

Richard Lowery

University of Texas-Austin

Date Written: July 8, 2020


The U.S. residential real estate agency market presents a puzzle for economic theory: commissions on real estate transactions have remained high for decades even though entry is frequent and costs are low. We model the real estate agency market, and other brokered markets, as a game in which brokers first post prices for customers and then choose which other agents to work with. We show that prices appreciably higher than the competitive level can be sustained (for a fixed discount factor) regardless of the number of brokers by using strategies that condition working with a broker on that broker’s posted prices.

Keywords: Real estate, Repeated games, Collusion, Antitrust, Brokered markets

JEL Classification: D43, L13, L4, R39

Suggested Citation

Hatfield, John William and Kominers, Scott Duke and Lowery, Richard, Collusion in Brokered Markets (July 8, 2020). Harvard Business School Entrepreneurial Management Working Paper No. 20-023 (2019), Available at SSRN: or

John William Hatfield

University of Texas at Austin ( email )

Austin, TX 78712
United States

Scott Duke Kominers (Contact Author)

Harvard University ( email )

Rock Center
Harvard Business School
Boston, MA 02163
United States


a16z crypto ( email )

Richard Lowery

University of Texas-Austin ( email )

Red McCombs School of Business
Austin, TX 78712
United States

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