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What you see here is not price-fixing, but expedited price-discovery. What is problematic (to society generally and renters specifically) is the fact that this

What you see here is not price-fixing, but expedited price-discovery. What is problematic (to society generally and renters specifically) is the fact that this price-discovery is done in the market with artificially constrained supply. Prices raise because people are willing to pay that much for dwelling. People are willing to pay that much, because supply doesn't keep with demand. ## Why I don't consider this a case of price-fixing Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view. There's very strong incentive to defect from "optimal vacancy rate" and eat outsized profit compared to the rest of competition. Making building easier makes consolidation harder, as outsiders are now potential defectors as well. AFAIK we're not in monopoly situation (yet?) for rental properties.

dangerlibrary 4y ago
What you see here is literally the definition of cartel price fixing. OPEC engages in price fixing. It is unstable, as you say, but nobody would say "OPEC is a perfect example of the free market functioning exactly as it should, with no price fixing or market manipulation going on."
- sib 4y ago
  OPEC technically engages in supply fixing - the market then sets the price driven by the intersection of the demand curve and the (fixed) supply. If OPEC reduced supply and users of oil reduced demand by more than that same percentage, prices would likely drop.
- Aunche 4y ago
  The biggest beneficiary of cartels are competitors that are outside the cartel. For example, OPEC enabled fracking to be profitable. To hurt fracking, they loosened their price fixing. If RealPage were price fixing rather than simply facilitating price discovery, landlords would have no incentive pay for the service.
  - dangerlibrary 4y ago
    > The biggest beneficiary of cartels are competitors that are outside the cartel. This is just... obviously wrong. If this were true, nobody would ever join a cartel, since membership is voluntary. All antitrust legislation and enforcement would be rendered entirely moot, because nobody would ever collude to fix prices.
notahacker 4y ago
If I had to give an example of the difference between price-fixing and expedited price discovery, I'd say software used by vendors with significant market power that not only suggests a price based on other clients' prices, but actually sets it and bills based on it, whilst actively resisting clients trying to bill lower amounts would be a pretty good example of when it becomes fixing (the fact it's apparently documented in training programmes with cheesy computer voices saying, in essence "think of the long term benefits of the cartel, not your tenants or vacancy rate" and implemented by demanding clients seek "approval" for their own prices and not just through poor UX is the icing on the cake)
PeterisP 4y ago
Why do you consider that "Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view." + "there is a very strong incentive to defect" would imply that this is not price fixing? Quoting FTC, price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels; Generally, the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor. It doesn't matter if we're in a monopoly situation, it doesn't matter if the agreement is effective or if many participants defect - if some participants agree to coordinate prices, that is prohibited and punishable.
jnovek 4y ago
In the training tools covered in the article it mentioned that it was difficult (as in, you had to contact a support rep) to set a price other than the one recommended by RealPage. By making it difficult to manually set prices, the tendency towards defection is mitigated.
- vel0city 4y ago
  > as in you had to contact a support rep This is untrue. The escalation would be to the property's management team, which is the same group which configured the tool to use the recommended pricing. > If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. If I take a Playstation to the checkout counter at Walmart and say "Instead of $500, how about $450?", the person at the checkout counter doesn't have the authorization to change the price from the price enforced by the checkout system. They'd have to call over a manager and make the case as to why I should be able to buy it for $450 instead of the enforced price the system already set.
  - anonymouskimmer 4y ago
    From skimming over the relevant portions of the complaint that this quote is excerpted from, it looks like "Lessor's management" is probably the management team employed by RealPage to manage the Lessor's property (Lessor having ceded management from themselves to RealPage). Please explain if this is not the case. See sections 46 and 47 in the complaint: 46. RealPage and participating Lessors have provided one another with such mutual assurances, agreeing among themselves not to compete on price for the sale of multifamily residential real estate leases. They have effectuated their agreement through two mutually reinforcing mechanisms. First, participating Lessors have agreed to set prices using RealPage’s coordinated algorithmic pricing. Second, participating Lessors have agreed to stagger their lease renewal dates through RealPage, to avoid (otherwise natural) oversupplies in rental properties. 47. RealPage’s coordinated algorithmic pricing allows participating Lessors, in RealPage’s words, to “outsource [their] daily pricing and ongoing revenue oversight” to RealPage, with RealPage pricing participating Lessors’ “properties as if we [RealPage] own them ourselves”—that is, as if RealPage and its participating Lessors were operating as a monopolist.
njovin 4y ago
IMO "fixing" is the act of forcibly setting prices across a market, whereas "discovery" is informing your customers with up-to-date pricing info and letting them decide whether to adopt it or not. If you need to get on the phone with RealPage every single morning and either adopt their suggested pricing or jump through beuracratic hoops to exclude yourself from doing so, that seems much more like fixing. They're not saying "here's the data, go about your day," they're saying "you are to charge tenants this much rent and you better have a good goddamned reason if you refuse."

dangerlibrary 4y ago

What you see here is literally the definition of cartel price fixing. OPEC engages in price fixing. It is unstable, as you say, but nobody would say "OPEC is a perfect example of the free market functioning exactly as it should, with no price fixing or market manipulation going on."

sib 4y ago
OPEC technically engages in supply fixing - the market then sets the price driven by the intersection of the demand curve and the (fixed) supply. If OPEC reduced supply and users of oil reduced demand by more than that same percentage, prices would likely drop.
Aunche 4y ago
The biggest beneficiary of cartels are competitors that are outside the cartel. For example, OPEC enabled fracking to be profitable. To hurt fracking, they loosened their price fixing. If RealPage were price fixing rather than simply facilitating price discovery, landlords would have no incentive pay for the service.
- dangerlibrary 4y ago
  > The biggest beneficiary of cartels are competitors that are outside the cartel. This is just... obviously wrong. If this were true, nobody would ever join a cartel, since membership is voluntary. All antitrust legislation and enforcement would be rendered entirely moot, because nobody would ever collude to fix prices.

notahacker 4y ago

If I had to give an example of the difference between price-fixing and expedited price discovery, I'd say software used by vendors with significant market power that not only suggests a price based on other clients' prices, but actually sets it and bills based on it, whilst actively resisting clients trying to bill lower amounts would be a pretty good example of when it becomes fixing (the fact it's apparently documented in training programmes with cheesy computer voices saying, in essence "think of the long term benefits of the cartel, not your tenants or vacancy rate" and implemented by demanding clients seek "approval" for their own prices and not just through poor UX is the icing on the cake)

PeterisP 4y ago

Why do you consider that "Price-fixing that is not done via consolidation is ultimately unstable from game theory point of view." + "there is a very strong incentive to defect" would imply that this is not price fixing? Quoting FTC, price fixing is an agreement (written, verbal, or inferred from conduct) among competitors to raise, lower, maintain, or stabilize prices or price levels; Generally, the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor. It doesn't matter if we're in a monopoly situation, it doesn't matter if the agreement is effective or if many participants defect - if some participants agree to coordinate prices, that is prohibited and punishable.

jnovek 4y ago

In the training tools covered in the article it mentioned that it was difficult (as in, you had to contact a support rep) to set a price other than the one recommended by RealPage. By making it difficult to manually set prices, the tendency towards defection is mitigated.

vel0city 4y ago
> as in you had to contact a support rep This is untrue. The escalation would be to the property's management team, which is the same group which configured the tool to use the recommended pricing. > If there is a disagreement between the participating Lessor and the RealPage Pricing Advisor, the dispute is often elevated to the Lessor’s management for resolution, and specific reasons justifying a departure from RealPage’s pricing level are usually required. If I take a Playstation to the checkout counter at Walmart and say "Instead of $500, how about $450?", the person at the checkout counter doesn't have the authorization to change the price from the price enforced by the checkout system. They'd have to call over a manager and make the case as to why I should be able to buy it for $450 instead of the enforced price the system already set.
- anonymouskimmer 4y ago
  From skimming over the relevant portions of the complaint that this quote is excerpted from, it looks like "Lessor's management" is probably the management team employed by RealPage to manage the Lessor's property (Lessor having ceded management from themselves to RealPage). Please explain if this is not the case. See sections 46 and 47 in the complaint: 46. RealPage and participating Lessors have provided one another with such mutual assurances, agreeing among themselves not to compete on price for the sale of multifamily residential real estate leases. They have effectuated their agreement through two mutually reinforcing mechanisms. First, participating Lessors have agreed to set prices using RealPage’s coordinated algorithmic pricing. Second, participating Lessors have agreed to stagger their lease renewal dates through RealPage, to avoid (otherwise natural) oversupplies in rental properties. 47. RealPage’s coordinated algorithmic pricing allows participating Lessors, in RealPage’s words, to “outsource [their] daily pricing and ongoing revenue oversight” to RealPage, with RealPage pricing participating Lessors’ “properties as if we [RealPage] own them ourselves”—that is, as if RealPage and its participating Lessors were operating as a monopolist.

njovin 4y ago

IMO "fixing" is the act of forcibly setting prices across a market, whereas "discovery" is informing your customers with up-to-date pricing info and letting them decide whether to adopt it or not. If you need to get on the phone with RealPage every single morning and either adopt their suggested pricing or jump through beuracratic hoops to exclude yourself from doing so, that seems much more like fixing. They're not saying "here's the data, go about your day," they're saying "you are to charge tenants this much rent and you better have a good goddamned reason if you refuse."