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DOJ sues realpage for algorithmic pricing scheme that harms renters

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Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#451

Post by stetrain »

siliconc0w wrote: post #440

Concentration is more likely problem. When there are only a handful of competitors in a geographical area they'll find a way to collude one way or another, even if it's just a signal group or staring at each out while slowly raise prices. I think >=6 is probably the point where you might start to see defectors.

Yeah. It seems like antitrust in the US will happily let competition consolidate down to 2 or sometimes even 1 viable provider, and the only react later once evidence of consumer harm can be shown via higher prices.

At that point a lot of the damage is already done, and trying to reverse it is more complicated than preserving a competitive market to begin with.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#452

Post by staplers »

CPLX wrote: post #448
staplers wrote: post #445

Earlier quoted context omitted.

I hope they burn the company down Will probably just be a "fine" (got caught tax) and nothing changes. It's an explicit signal to keep doing it unless the punishment is worse than the profit.

In the case of RealPage that doesn’t seem like the most probable outcome. They’ve been caught red-handed engaged in blatantly illegal price-fixing conduct that has harmed millions of American families. They’re up against the DOJ and plenty of red state AGs too, all signs point to them being nailed to the wall. At least at a corporate level, we don’t have a good track record of sending execs to jail of course.

They'll make a big show for the headlines "record breaking $50 million fine for evil bad company" and it will be 35% of profit made on said practices.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#453

Post by Animats »

jasode wrote: post #191
bogwog wrote: post #152

Earlier quoted context omitted.

I think you're over analyzing and confusing things. Price fixing is when competitors work together to raise prices above what they would normally be in a competitive market. Using your gas station example, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less mone…

>, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less money. But the airlines are also doing the opposite of your scenario: they also raise prices instead of lower them via legal "price signaling" via publicized fares[1] in the global reservations system. Compe…

This is oligopoly. If there are less than four major players, price competition seems to stop. There's a EU study on this, which I've referenced before. More than four, and someone will drop their price to $8.99, grow their market share, and make more money. When the number of competitors is very small, and you already have major market share, it's very hard to grow market share by lowering prices. So price competition stops.

It doesn't take collusion. It's a result of size alone.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#454

Post by abakker »

staplers wrote: post #452
CPLX wrote: post #448

Earlier quoted context omitted.

In the case of RealPage that doesn’t seem like the most probable outcome. They’ve been caught red-handed engaged in blatantly illegal price-fixing conduct that has harmed millions of American families. They’re up against the DOJ and plenty of red state AGs too, all signs point to them being nailed to the wall. At least at a corporate level, we don’t have a good track record of sending execs to jail of course.

They'll make a big show for the headlines "record breaking $50 million fine for evil bad company" and it will be 35% of profit made on said practices.

Worse, the real profits made were by the individual landlords, so there's no incentive against a similar enough service to emerging instead.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#455

Post by seanmcdirmid »

__loam wrote: post #433
seanmcdirmid wrote: post #407

Earlier quoted context omitted.

We don’t have it because we aren’t a city state. In Singapore, you have a few choices, but they are all in Singapore. If the public housing system came to the USA without any local residency requirements, everyone would want to live in a few hot cities and the system would just fall apart. Not only that, once residency restrictions are in place, people will be stuck in places due to their public housing, they won’t b…

This is bizarre reasoning.

It really isn’t. It’s simple game theory. People want to live in nice places. So they will all want their public housing in a nice place, but people generally like the same places, and that doesn’t really work for 380 million people. Someone will have to live in Mississippi, but then that also locks them down since we aren’t using market anymore to determine who gets to live where.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#456

Post by colonCapitalDee »

ang_cire wrote: post #421
bogwog wrote: post #213

Earlier quoted context omitted.

> Competitors can converge on a higher price instead of a lower price. It's not just one direction. They just need to do it via public price signaling to stay out of legal trouble. I don't understand what you're saying. Are you saying that companies are colluding, but not really because the prices are public? Most prices are public, just walk into any supermarket or open Amazon.com and you'll see public prices. If a…

> If a company is able to price a product above their competitors and still succeed (e.g. by investing more in marketing), that's legal too. Yes, but it also runs counter to the idea that free markets tend to drive prices down through competition. In reality, 1 of 2 things happens: a) companies try to differentiate their products enough to not be direct competitors (e.g. exclusive content on streaming platforms, or p…

No, your time horizon is too short. Prices go up in the short term, which increases profits, which incentivizes competition, which brings prices down in the long term. A few years of increased prices is worth increased efficiency over decades. Prices are going in most industries, US markets are generally quite competitive.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#457

Post by seanmcdirmid »

HDThoreaun wrote: post #428
seanmcdirmid wrote: post #422

Earlier quoted context omitted.

The construction industry really is a jobs program for rural surplus labor, they’ve optimized their construction techniques for that with the same 30 story blocks with slightly overbuilt concrete walls and floors. But they have surplus units and even in hot cities like Beijing or Shanghai you’ll find empty apartments that haven’t even been renovated yet. It’s not clear where this will end. The American market has lot…

They build the same building over and over again because theyve had to create litearlly a billion units in the last 50 years and it's faster that way. There are unsold units because the price went crazy due to speculation. Empty housing is one of the main indicators of a real estate bubble. American vacancy rate has slowly crept up but is still extremely low outside of manhattan. Americans tend not to believe housing…

The empty houses are definitely sold. They are just being held since the return on an unrenovated unit is higher than a renovated one. They are speculating long term, and being landlords doesn’t give them much. There are also apartments that have been sold but are never being lived in before the building is torn down and rebuilt, but they’ll still make their return regardless.

As for the USA, yes it isn’t as bad here yet. But it’s getting there.

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#458

Post by nox101 »

staplers wrote: post #445
ineedaj0b wrote: post #426

This case -like the Sackler case- I hope they burn the company down with malice to make an example. I have similar feelings about Airbnb. I think they caused a good deal of harm, but I'm more kind to the argument they are allowing market forces to act. People are priced out by mid-level wealth holders in nice locations who rent out to tourists; homes young families could have enjoyed. Airbnb could be a net harm on so…

I hope they burn the company down Will probably just be a "fine" (got caught tax) and nothing changes. It's an explicit signal to keep doing it unless the punishment is worse than the profit.

it also feels like it has no meaning unless they magically roll back rent prices by 50% or more... which isn't going to happen

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#459

Post by ssl-3 »

insane_dreamer wrote: post #425
bogwog wrote: post #152

Earlier quoted context omitted.

I think you're over analyzing and confusing things. Price fixing is when competitors work together to raise prices above what they would normally be in a competitive market. Using your gas station example, a gas station isn't going to look at a competitor selling gas at $4.15 and decide to raise their price to $4.45. They would lower their price to match the competition, otherwise they'd lose sales and make less mone…

> They would lower their price to match the competition, otherwise they'd lose sales and make less money. - they could also see their competitor raise their price to from $4.00 to $4.15 (for whatever reason) and decide that they can raise their price as well without losing customers.

They can do both things, and both things are described by Edgeworth Price Cycles[0].

In gas prices, there's undercutting to draw business -- which seems natural in a free market. That's often smaller, local players who drive this stage, pricing things just below the nearby competition, but players of all sizes are involved.

But sometimes, the price jumps up -- often by a significant margin, and across the board. This is often at the behest of a big player; when company like Exxon Mobil seemingly-arbitrarily raises gas prices in an area, it tends to set a trend. The smaller players tend to raise prices in accordance with this higher baseline and are happy to see the financial relief.

This may seem counterintuitive in a competitive market, but it does happen anyway. And it's all temporary and cyclical, as we've all seen over and over again. Free markets aren't necessarily stable systems that are free of resonance.

[0]: https://en.wikipedia.org/wiki/Edgeworth_price_cycle

Re: DOJ sues realpage for algorithmic pricing scheme that harms renters

#460

Post by dboreham »

eldridgea wrote: post #424
ndesaulniers wrote: post #417

Companies are culluding to suppress wages by algorithm, too. Look up a company called Aon, and their product called Radford Data & Analytics.

~2019 I led a team of highly qualified security R&D folks inside Cisco (we were part of an acquisition), these folks were effectively highly specialized SWEs. But because the title was something like "security researcher" it was compared against the closet Radform ladder which was closer to to compliance officer. This meant the specialists were on a ladder with often lower pay than a standard SWE, and I couldn't shif…

I have some insight into this space (compensation analysis) through a family member. Either the VP was incompetent, or the mismatched job situation was used as cover for the outcome they intended (people leaving). "The bureaucracy" exists to serve businesses interests, and legal risks to same.
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