4 ms·

CME provides a place to trade futures products, which producers use to hedge risk. That is not like the apartment rent collusion.

Aunche 4y ago
The CME facilitates price discovery with derivatives. RealPage facilitates price discovery with data science. If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorithm for price suggestions. Realpage suggests that they charge an exorbitant $10000 per unit, which leads to only 50% of all units being occupied, so your expected value of $5000 per unit. However, if you're a landlord, you'd be better off renting your units at $9000, leading to 90% occupancy. Your expected profit per unit is $8100, so you're actually much better off without the algorithm.
- landemva 4y ago
  Futures products allow producers to offload some of their risk. CME provides a regulated transparent place to trade those products. While I was a small-time landlord in the past, I am not now. It is difficult (financing, zoning, permits) to put up a new apartment building, so there is no extra $8100 for me. If landlords meet weekly at the diner to set unit pricing it would be anti-trust collusion. The landlords paying uncle Bob to do the same thing is an extra step and it is still collusion.
  - Aunche 4y ago
    >The landlords paying uncle Bob to do the same thing is an extra step and it is still collusion. Did you read my example? My point is that this not what they're doing. You pay Realpage a fee based on the total square footage of units you want to be priced. In exchange, they estimate the market rent of your apartment to the best of their ability. They have no incentive to do otherwise.

4 ms·

CME provides a place to trade futures products, which producers use to hedge risk. That is not like the apartment rent collusion.

by landemva 4y ago

Aunche 4y ago
The CME facilitates price discovery with derivatives. RealPage facilitates price discovery with data science. If they are really facilitating collusion, then they would be selling a broken product. For example, for simplicity's sake, let's say that a city has a lot of landlords, but all their units are identical and they all follow the RealPage algorithm for price suggestions. Realpage suggests that they charge an exorbitant $10000 per unit, which leads to only 50% of all units being occupied, so your expected value of $5000 per unit. However, if you're a landlord, you'd be better off renting your units at $9000, leading to 90% occupancy. Your expected profit per unit is $8100, so you're actually much better off without the algorithm.
- landemva 4y ago
  Futures products allow producers to offload some of their risk. CME provides a regulated transparent place to trade those products. While I was a small-time landlord in the past, I am not now. It is difficult (financing, zoning, permits) to put up a new apartment building, so there is no extra $8100 for me. If landlords meet weekly at the diner to set unit pricing it would be anti-trust collusion. The landlords paying uncle Bob to do the same thing is an extra step and it is still collusion.
  - Aunche 4y ago
    >The landlords paying uncle Bob to do the same thing is an extra step and it is still collusion. Did you read my example? My point is that this not what they're doing. You pay Realpage a fee based on the total square footage of units you want to be priced. In exchange, they estimate the market rent of your apartment to the best of their ability. They have no incentive to do otherwise.