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Sure they can try that. And helps if there are only two options, when in reality there are many (same town, other town, live at home with parents, move in with

by bko 3y ago

Sure they can try that. And helps if there are only two options, when in reality there are many (same town, other town, live at home with parents, move in with partner, etc). But that first person takes a Big risk raising prices since he is necessarily losing money relative to charging market price in the hopes others come along in significant numbers. Leaving rooms vacant is incredibly expensive. Profit margins are not that high. So think if you're making 15% margin eating a single month of rent would cost you profit over 6 units. It's a hell of a gamble

burkaman 3y ago
This is not hypothetical, it actually happened, and a lot more than two landlords were involved. 14 companies, and "Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office." Profit margins are high if you collude with 90% of the market to artificially raise prices.
- bko 3y ago
  Where did you get that from the article? > The complaint, filed earlier today by Attorney General Brian Schwalb, focuses on the multifamily landlords' use of software from Texas-based firm RealPage, which suggests rental prices based on a pricing algorithm. Key to those models, according to the suit, is the data fed in from the landlords and the pressure RealPage puts on them to stick to the code-derived rental rates. It's a complaint. Nothing was filed yet. And it looks like they used a pricing algo to suggest a price? Im suggested a price when I sell on eBay, or StubHub or Facebook marketplace, or pretty much anywhere. I don't know how they "pressured" landlords but maybe a box like "we suggest market price to maximize returns!" eBay similarly warns me when I stray too far away. The pricing algo is actually a fabulous service. And if they're a property manager then their job is to find the market price and rent out apartments at the behest of landlords. I really don't see the technical issue here. You can say collude and conspire, but what does that mean in technical terms. And what does "being subject to" the algo mean? Exposed?
  - stale2002 3y ago
    > You can say collude and conspire, but what does that mean in technical terms RealPage requires users to accept some % of centrally-decided prices. That's the issue. > And what does "being subject to" the algo mean? Exposed? No. It means being required to set prices to what the algo says, instead of being allowed to "defect",with lower price.
  - burkaman 3y ago
    I got it from the linked Propublica investigation. There is quite a bit of information in there about how the software works and what the real-world results have been. I like your comparison to other marketplaces. If an overwhelming portion of a certain product were sold on eBay, and eBay suggested prices to all sellers that nearly all of them accepted, I would consider that collusion as well. If that product were a luxury good like Pokemon cards or something, I would consider the collusion unethical but maybe not a huge deal. If the product were a fundamental human right, like housing, I would be very upset and would want the government to get involved.
stale2002 3y ago
Indeed it is a gamble. Which is why the very bad and illegal part, of the software company trying to enforce the high prices, was so bad. This only works if landlords can't "defect" and lower prices on their own. That's why it's collusion.
naijaboiler 3y ago
Yeah I you have just explained why it is collusion. In a free market, a landlord raising price too high will be afraid of losing market and having too much vacancies. But not here, he is relatively assured he won’t be losing much since other landlords won’t undercut him, since they have implicitly agreed via the software to follow the same pricing. That’s collusion. Period

by bko 3y ago

burkaman 3y ago

This is not hypothetical, it actually happened, and a lot more than two landlords were involved. 14 companies, and "Across a wider Washington-Arlington-Alexandria area, more than 90 percent of units in large buildings are subject to RealPage pricing, according to Schwalb's office." Profit margins are high if you collude with 90% of the market to artificially raise prices.

bko 3y ago
Where did you get that from the article? > The complaint, filed earlier today by Attorney General Brian Schwalb, focuses on the multifamily landlords' use of software from Texas-based firm RealPage, which suggests rental prices based on a pricing algorithm. Key to those models, according to the suit, is the data fed in from the landlords and the pressure RealPage puts on them to stick to the code-derived rental rates. It's a complaint. Nothing was filed yet. And it looks like they used a pricing algo to suggest a price? Im suggested a price when I sell on eBay, or StubHub or Facebook marketplace, or pretty much anywhere. I don't know how they "pressured" landlords but maybe a box like "we suggest market price to maximize returns!" eBay similarly warns me when I stray too far away. The pricing algo is actually a fabulous service. And if they're a property manager then their job is to find the market price and rent out apartments at the behest of landlords. I really don't see the technical issue here. You can say collude and conspire, but what does that mean in technical terms. And what does "being subject to" the algo mean? Exposed?
- stale2002 3y ago
  > You can say collude and conspire, but what does that mean in technical terms RealPage requires users to accept some % of centrally-decided prices. That's the issue. > And what does "being subject to" the algo mean? Exposed? No. It means being required to set prices to what the algo says, instead of being allowed to "defect",with lower price.
- burkaman 3y ago
  I got it from the linked Propublica investigation. There is quite a bit of information in there about how the software works and what the real-world results have been. I like your comparison to other marketplaces. If an overwhelming portion of a certain product were sold on eBay, and eBay suggested prices to all sellers that nearly all of them accepted, I would consider that collusion as well. If that product were a luxury good like Pokemon cards or something, I would consider the collusion unethical but maybe not a huge deal. If the product were a fundamental human right, like housing, I would be very upset and would want the government to get involved.

stale2002 3y ago

Indeed it is a gamble. Which is why the very bad and illegal part, of the software company trying to enforce the high prices, was so bad. This only works if landlords can't "defect" and lower prices on their own. That's why it's collusion.

naijaboiler 3y ago

Yeah I you have just explained why it is collusion. In a free market, a landlord raising price too high will be afraid of losing market and having too much vacancies. But not here, he is relatively assured he won’t be losing much since other landlords won’t undercut him, since they have implicitly agreed via the software to follow the same pricing. That’s collusion. Period