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Information asymmetry and public response: Evidence from the housing market

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  • Wang, Xiaodong
  • Feng, Guimei
  • Xu, Jiayi
  • Zhang, Li

Abstract

This paper takes the introduction of commission collection from sellers in the Chinese housing market as a significant shock, and reveals the role that information asymmetry plays in the market by examining the public's response to two types of commission collection. Our findings indicate that when sellers transition from a commission model that is solely borne by buyers to one that is shared between both buyers and sellers, the listing prices of housing decline significantly, by approximately 1.6 % to 2.3 %. In contrast, when sellers face no change in the commission structure, their listing prices do not show a significant decline. This reduction is primarily attributed to the new commission model mitigating the information asymmetry that sellers experience. This research offers valuable insights into the impact of information asymmetry in housing markets.

Suggested Citation

  • Wang, Xiaodong & Feng, Guimei & Xu, Jiayi & Zhang, Li, 2024. "Information asymmetry and public response: Evidence from the housing market," Economics Letters, Elsevier, vol. 244(C).
    • Handle: RePEc:eee:ecolet:v:244:y:2024:i:c:s0165176524005238
    DOI: 10.1016/j.econlet.2024.112039
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    References listed on IDEAS

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