The contribution of buyer brokers

Discussions about buyer brokerage often assume that buyers are trying to avoid exploitation by seller brokers, especially when bargaining. This paper questions that assumption by proposing a matching model where, among other things, brokers can increase the quality of matching. I provide conditions under which the type of brokerage does not matter. I also show that the optimal buyer brokerage contract is increasing in price, at least for some interval. Finally, I comment on other features of an equilibrium in the agency market whose analysis depends on whether buyer brokers act to redistribute bargaining rents or to improve the quality of matches. (C) 1997 Academic Press.