Journal of Business Ethics

, Volume 80, Issue 1, pp 23–35 | Cite as

Ethics and Lobbying: The Case of Real Estate Brokerage

  • David BarkerEmail author


Members of licensed occupations benefit from legal standards that limit entry into their professions. Is it ethical for these professionals to give political support to these standards? I examined the case of real estate brokers and found that their educational requirements raise average commissions by one quarter of a percentage point, costing consumers $5.4 billion per year without improving the quality of brokerage services. The case raises interesting ethical issues which are difficult to resolve.


brokerage ethics real estate regulation 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Becker G. 1976. Toward a More General Theory of Regulation: Comment. Journal of Law and Economics, 19, 245–248CrossRefGoogle Scholar
  2. Benham L. 1972. The Effect of Advertising on the Price of Eye glasses. Journal of Law and Economics, 15, 337–352CrossRefGoogle Scholar
  3. Benham L., & Benham A. 1972. Regulating Through the Professions: A Perspective on Information Control. Journal of Law and Economics, 18, 421–427CrossRefGoogle Scholar
  4. Carroll S., & Gaston R. J. 1981. Occupational Restrictions and Quality of Service Received: Some Evidence. Southern Economic Journal, 47, 959–976CrossRefGoogle Scholar
  5. Federal Trade Commission. 1983. The Residential Brokerage Industry. Washington: Federal Trade CommissionGoogle Scholar
  6. Federman M., Harrington D., & Krynski K. 2006. The Impact of State Licensing Regulations on Low-Skilled Immigrants: The Case of Vietnamese Manicurists. American Economic Review, 96, 237–241CrossRefGoogle Scholar
  7. Friedman M. 1953. Essays in Positive Economics. Chicago: University of Chicago PressGoogle Scholar
  8. Friedman M., & Kuznets S. 1945. Income from Independent Professional Practice. New York: National Bureau of Economic Research. 23Google Scholar
  9. Gowthorpe C., & Amat O. 2005. Creative Accounting: Some Ethical Issues of Macro- and Micro-Manipulation. Journal of Business Ethics, 57, 55–64CrossRefGoogle Scholar
  10. Hall R., & Deardorff A. 2006. Lobbying as Legislative Subsidy. American Political Science Review, 100, 69–84CrossRefGoogle Scholar
  11. Hsieh C.-T., & Moretti E. 2003. Can Free Entry be Efficient? Fixed Commissions and Social Waste in the Real Estate Industry. Journal of Political Economy, 111, 1076–1122CrossRefGoogle Scholar
  12. Johnson L., & Loucks C. 1986. The Effect of State Licensing Regulations on the Real Estate Brokerage Industry. American Real Estate and Urban Economics Association Journal, 14, 567–582CrossRefGoogle Scholar
  13. Keffer J., & Hill R. 1997. An Ethical Approach to Lobbying Activities of Businesses in the United States. Journal of Business Ethics, 16, 1371–1379CrossRefGoogle Scholar
  14. Kleiner M. 2000. Occupational Licensing. Journal of Economic Perspectives, 14, 189–202CrossRefGoogle Scholar
  15. Kleiner M., & Kudrle R. 2000. Does Regulation Affect Economic Outcomes? The Case of Dentistry. Journal of Law and Economics, 43, 547–582CrossRefGoogle Scholar
  16. Krueger A. 1974. The Political Economy of the Rent-Seeking Society. American Economic Review, 64, 291–303Google Scholar
  17. Levitt, S. and C. Syverson: 2005, ‹Market Distortions When Agents are Better Informed: The Value of Information in Real Estate’, National Bureau of Economic Research. Working Paper 11053Google Scholar
  18. Maurizi A. 1974. Occupational Licensing and the Public Interest. Journal of Political Economy, 82, 399–413CrossRefGoogle Scholar
  19. Maurizi A., Moore R., & Shepard L. 1981. Competing for Professional Control: Professional Mix in the Eye glasses Industry. Journal of Law and Economics, 24, 351–364CrossRefGoogle Scholar
  20. McCloskey, D.: 2007, Good Old Chicago and Ethics. Presentation, History of Economics Society Meetings, ChicagoGoogle Scholar
  21. Nadel, M.: 2006, A Critical Assessment of the Standard, Traditional, Residential Real Estate Broker Commission Rate Structure. AEI-Brookings Joint Center for Regulatory Studies. Publication 06-28Google Scholar
  22. Peltzman S. 1976. Toward a More General Theory of Regulation. Journal of Law and Economics, 19, 211–240CrossRefGoogle Scholar
  23. Peltzman S. 1987. The Health Effects of Mandatory Prescriptions. Journal of Law and Economics, 30, 207–238CrossRefGoogle Scholar
  24. Real Trends: 2006, Consumer Tsunami. <>Google Scholar
  25. Shilling J., & Sirmans C. F. 1988. The Effects of Occupational Licensing on Complaints Against Real Estate Agents. Journal of Real Estate Research, 3, 1–9Google Scholar
  26. Sirmans C. F., & Turnbull G. 1997. Brokerage Pricing Under Competition. Journal of Urban Economics, 41, 102–117CrossRefGoogle Scholar
  27. Stigler G. 1971. The Theory of Economic Regulation. The Bell Journal of Economics and Management Science, 2, 3–21CrossRefGoogle Scholar
  28. Woodstock Theological Center: 2002, The Ethics of Lobbying: Organized Interests, Political Power, and the Common Good (Georgetown University Press, Washington DC)Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  1. 1.University of IowaIowa CityU.S.A.
  2. 2.Iowa CityU.S.A.

Personalised recommendations