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Price fixing is problematic only because it allows producers to collude and force above-market price and restrict supply. That is problematic in markets with e

Price fixing is problematic only because it allows producers to collude and force above-market price and restrict supply. That is problematic in markets with elastic supply, where price competition could change supply of individual market participants, but not in inelastic/fixed-supply market like rental market. One could verify if this price discovery caused above-market price by comparing vacant rental rate. If it is higher than would be expected, then one could argue price discovery algorithms caused price fixing of above-market rate. If it is not, then it is just an efficient way to discover true market rate and there is no damage by using it.

rapind 3y ago
> efficient way to discover true market rate and there is no damage by using it. The algorithms are optimizing price instead of vacancy. I don't think we can assume these are one and the same (price and vacancy) because there are ongoing cost differences between vacant and occupied property. As an extremely unlikely scenario, what if the algorithm determines it's optimal to rent only 20% of your listings to scarcity whales at 4 times the price leaving 80% vacant due to maintenance costs and other factors? From a market perspective, that's absolutely fine, but from a society perspective it's pretty horrible.
- chii 3y ago
  > From a market perspective, that's absolutely fine, but from a society perspective it's pretty horrible. which is where vacancy penalty should be imposed by the gov't to prevent this undesired behaviour - if the constituents vote for such measures of course.
- zajio1am 3y ago
  That is what i address in the second paragraph: if vacancy rate is higher than would be expected, then one could argue price discovery algorithms caused price fixing of above-market rate.
ehnto 3y ago
It is still problematic for the same reasons, they just don't have to handle fixing the supply as well. That said, it would be naive to assume this conversation is disconnected from lobbying against housing supply programs and zoning that keeps supply of homes low as well.
comte7092 3y ago
Um what? Are you really asserting that suppliers should be able to set prices as high as possible for a fundamentally needed good despite the fact that floating the price has no effect on the underlying supply? Just the epitome of “the market” being the end rather than the means.
- zajio1am 3y ago
  I am asserting that in conversation about market collusion it is relevant whether such implicit coordination leads to different price level that would be without such coordination. If you have fixed supply, then price as high as possible as demand allows is equilibrium reached even without any coordination / collusion by suppliers, and it is just a question how fast market converges to such equilibrium. Whether there should be social or political reasons for regulating rents is completely different conversation.

rapind 3y ago

> efficient way to discover true market rate and there is no damage by using it. The algorithms are optimizing price instead of vacancy. I don't think we can assume these are one and the same (price and vacancy) because there are ongoing cost differences between vacant and occupied property. As an extremely unlikely scenario, what if the algorithm determines it's optimal to rent only 20% of your listings to scarcity whales at 4 times the price leaving 80% vacant due to maintenance costs and other factors? From a market perspective, that's absolutely fine, but from a society perspective it's pretty horrible.

chii 3y ago
> From a market perspective, that's absolutely fine, but from a society perspective it's pretty horrible. which is where vacancy penalty should be imposed by the gov't to prevent this undesired behaviour - if the constituents vote for such measures of course.
zajio1am 3y ago
That is what i address in the second paragraph: if vacancy rate is higher than would be expected, then one could argue price discovery algorithms caused price fixing of above-market rate.

ehnto 3y ago

It is still problematic for the same reasons, they just don't have to handle fixing the supply as well. That said, it would be naive to assume this conversation is disconnected from lobbying against housing supply programs and zoning that keeps supply of homes low as well.

comte7092 3y ago

Um what? Are you really asserting that suppliers should be able to set prices as high as possible for a fundamentally needed good despite the fact that floating the price has no effect on the underlying supply? Just the epitome of “the market” being the end rather than the means.

zajio1am 3y ago
I am asserting that in conversation about market collusion it is relevant whether such implicit coordination leads to different price level that would be without such coordination. If you have fixed supply, then price as high as possible as demand allows is equilibrium reached even without any coordination / collusion by suppliers, and it is just a question how fast market converges to such equilibrium. Whether there should be social or political reasons for regulating rents is completely different conversation.