Final answer:
The power of traditional Multiple Listing Systems (MLS) was grounded in their exclusivity, allowing only members to access real estate listings, which impacted market efficiency by restricting information dissemination to a select group of real estate professionals.
Step-by-step explanation:
The power of traditional Multiple Listing Systems (MLS) lay in their role as a gated repository of information, where only members had access to the detailed listings and data.
This was a powerful tool because real estate markets require both buyers and sellers to be well informed about market conditions, as well as the relative scarcities of goods and services, for the market system to function efficiently. The market system is considered an efficient mechanism for information dissemination, but the MLS restricted this flow to members.
Various market participants, including sellers, compete and are generally free to enter and leave the market, suggesting an ideally competitive environment. However, when restrictions like MLS access are placed, it can hinder the competitive nature of real estate transactions and the dissemination of information.
This competitive nature has historically seen challenges, particularly with governmental limitations on competition, such as those exemplified by regulations on airlines, banks, and telecommunications that were more common in the United States through much of the twentieth century. These limitations were designed to manage markets but often stifled competition and innovation.