ITU Economics cordially invites you to attend the following Economics PricewaterhouseCoopers-İTÜ Economics seminar:
Date & Time: April 7, 2016, Friday, 2:00PM.
Location: Room F235 - ITU Faculty of Management, Maçka 34337 Istanbul
Speaker: Christopher Hannum (Istanbul Technical University)
Title: Spatial Competition Among Residential Brokers
Anecdotal evidence suggests that firms and individuals participating in property-related markets, such as residential brokers, consider that competition among them intensifies during property market downturns. This is at odds with conventional theory, which suggests that in a downturn competition will decrease as some firms faced with losses leave the market. We argue that this disconnect may be caused by an unnoticed spatial dimension to competition in these markets, where firms choose the area in which they will operate. We first demonstrate using a spatial agent-based model (ABM) that the desire by a broker to restrict market area to appeal to clients within that local area may be consistent with expanded market areas by brokers and hence intensified competition during downturns. We then calculate market areas and shares within those market areas for individual brokers using MLS data and regress the size of market area and concentration within market condition variables. We find that during downturns, brokers’ market areas expand and competition within their market areas increases.