An interesting little paper here.
This paper studies the real estate brokerage industry in Greater Boston, an industry with low entry barriers and substantial turnover.
OK, estate agents, easy to get into, lots of people get in and out of it.
....we find that entry does not increase sales probabilities or reduce the time it takes for properties to sell
More agents doesn't mean more house sales or faster house sales.
decreases the market share of experienced agents,
Incumbents lose money because of all the competition.
A one-half reduction in the commission rate leads to a 73% increase in the number of houses each agent sells and benefits consumers by about $2 billion.
And if that increased competition reduces fees charged the consumers end up vastly better off.
So, if you're an experienced agent, or in fact, an incumbent in any trade, craft or profession, you'll see this as the obvious justification for licensure. Keep the rabble out, reduce competition, beef up fees and the consumer, umm, gets the services of a well regulated profession?
For the rest of us this is the opposite, the proof that licensure is a very bad idea indeed. For we're actually supposed to be running the whole thing for the benefit of the consumers, not the producers. In which case, crush the licensure hurdles and let the free market rip.
