4 ms·

The former (you can’t collude with a competitor to use the same algorithm to set prices)

by spamizbad 3y ago

lazide 3y ago
How can you collude with someone you don’t communicate with in any way?
- dkjaudyeqooe 3y ago
  By using a third party software or service that sets a price, knowing that your competitors are doing the same.
  - SoftTalker 3y ago
    Is it collusion to go to a rental search site and survey the asking rents, then asking similar for your property, knowing that your competitors are (probably) doing the same? Is it collusion when a gas station manager drives around the neighborhood, looks at the competitors posted price for gas, and sets his prices the same?
    - dkjaudyeqooe 3y ago
      Neither of those examples are what I described and are perfectly fine. You have to use a third party that is setting a price and stick to that, knowing others are doing the same. You're describing individuals determining their own price using their own judgement.
    - dugite-code 3y ago
      I think the argument in this case is the algorithm is effectively acting as a single agent that will always come to a fixed price and is actively recommending having vacancies to prevent competition. Where as if individuals are assessing the prices they are in a sort of prisoners dilemma, if they leave a property vacant someone may lower the average price meaning they can't recoup the lost earnings when it is occupied. So their best bet is to keep a property occupied as much as possible.
      - lazide 3y ago
        Eh, I'm really not convinced they'd be effective. If they're trying, then sure whack them with price fixing charges. I'm just not aware of any markets where these guys are dominant. You STILL have the prisoners dilemma issue, as there are tons of smaller landlords out there that definitely aren't playing in this game no matter what you're doing. And I don't see how this is THAT much different from just doing a search for rental properties in your area on zillow and setting your rent prices accordingly. If THAT is price fixing, then how does anyone expect a market to work at all?
    - makeitdouble 3y ago
      IANAL but it probably would it you did it whatever the circumstances. If you were the cheapest gas station in the neighborhood with prices appropriate to your operation but one day decide to align your price to your competitors and keep adjusting your price to whatever they set while nothing changed for you, that feels like the very definition of price fixing.
      - lazide 3y ago
        The weird thing for me here is... huh? Who isn't going to set their prices relative to their competitors in a market? And also try to have as low a cost as possible, so they have as good a profit margin as possible? It's basic business 101. If THAT is price fixing, then literally every business ever in the history of business has done price fixing. That also isn't colluding with anyone, near as I can tell. Maybe if you did a wink-wink-nod-nod to each other while driving by? Typically when I've heard of price fixing, there was some explicit cartel or industry assoc or meeting between folks or whatever where they could actually agree to something, punish 'non compliance', etc. This feels like the Google Antitrust case, where no one can even seem to say what they would have reasonably expected Google to do instead that would make any sense, and the issue is more that there are as-yet-unresolved structural components that no one is able to articulate a rule that would prevent whatever problem everyone is getting worked up about.
        makeitdouble 3y ago
        > Who isn't going to set their prices relative to their competitors in a market? And also try to have as low a cost as possible, so they have as good a profit margin as possible? It's basic business 101. The text book behavior would be to price yourself lower than the competitors and try to get market share from them. In our current paradigm, if you have low costs while keeping your price as high as the incumbent, there should be other players entering the market and disrupting it by going for lower margins. That mechanism not happening even as there's a variety of actors in the market is where it's qualified as "price fixing" IMHO. PS: about Google's antitrust case, are you refering to them stopping other stores from getting installed on android phones ?
- fragmede 3y ago
  "in any way" is doing a lot of work there though. The way they're using a 3rd party algorithm is effectively communication and the FTC isn't standing for it.
- dragonwriter 3y ago
  Communicating with a common intermediary is, or at least can be, indirect communication. This was, e.g., the case in the major ebook price fixing case where Apple was the common intermediary between the publishers.
- lodovic 3y ago
  Everyone is colluding with the middle man

The former (you can’t collude with a competitor to use the same algorithm to set prices)

lazide 3y ago

How can you collude with someone you don’t communicate with in any way?

dkjaudyeqooe 3y ago
By using a third party software or service that sets a price, knowing that your competitors are doing the same.
- SoftTalker 3y ago
  Is it collusion to go to a rental search site and survey the asking rents, then asking similar for your property, knowing that your competitors are (probably) doing the same? Is it collusion when a gas station manager drives around the neighborhood, looks at the competitors posted price for gas, and sets his prices the same?
  - dkjaudyeqooe 3y ago
    Neither of those examples are what I described and are perfectly fine. You have to use a third party that is setting a price and stick to that, knowing others are doing the same. You're describing individuals determining their own price using their own judgement.
  - dugite-code 3y ago
    I think the argument in this case is the algorithm is effectively acting as a single agent that will always come to a fixed price and is actively recommending having vacancies to prevent competition. Where as if individuals are assessing the prices they are in a sort of prisoners dilemma, if they leave a property vacant someone may lower the average price meaning they can't recoup the lost earnings when it is occupied. So their best bet is to keep a property occupied as much as possible.
    - lazide 3y ago
      Eh, I'm really not convinced they'd be effective. If they're trying, then sure whack them with price fixing charges. I'm just not aware of any markets where these guys are dominant. You STILL have the prisoners dilemma issue, as there are tons of smaller landlords out there that definitely aren't playing in this game no matter what you're doing. And I don't see how this is THAT much different from just doing a search for rental properties in your area on zillow and setting your rent prices accordingly. If THAT is price fixing, then how does anyone expect a market to work at all?
  - makeitdouble 3y ago
    IANAL but it probably would it you did it whatever the circumstances. If you were the cheapest gas station in the neighborhood with prices appropriate to your operation but one day decide to align your price to your competitors and keep adjusting your price to whatever they set while nothing changed for you, that feels like the very definition of price fixing.
    - lazide 3y ago
      The weird thing for me here is... huh? Who isn't going to set their prices relative to their competitors in a market? And also try to have as low a cost as possible, so they have as good a profit margin as possible? It's basic business 101. If THAT is price fixing, then literally every business ever in the history of business has done price fixing. That also isn't colluding with anyone, near as I can tell. Maybe if you did a wink-wink-nod-nod to each other while driving by? Typically when I've heard of price fixing, there was some explicit cartel or industry assoc or meeting between folks or whatever where they could actually agree to something, punish 'non compliance', etc. This feels like the Google Antitrust case, where no one can even seem to say what they would have reasonably expected Google to do instead that would make any sense, and the issue is more that there are as-yet-unresolved structural components that no one is able to articulate a rule that would prevent whatever problem everyone is getting worked up about.
      - makeitdouble 3y ago
        > Who isn't going to set their prices relative to their competitors in a market? And also try to have as low a cost as possible, so they have as good a profit margin as possible? It's basic business 101. The text book behavior would be to price yourself lower than the competitors and try to get market share from them. In our current paradigm, if you have low costs while keeping your price as high as the incumbent, there should be other players entering the market and disrupting it by going for lower margins. That mechanism not happening even as there's a variety of actors in the market is where it's qualified as "price fixing" IMHO. PS: about Google's antitrust case, are you refering to them stopping other stores from getting installed on android phones ?
fragmede 3y ago
"in any way" is doing a lot of work there though. The way they're using a 3rd party algorithm is effectively communication and the FTC isn't standing for it.
dragonwriter 3y ago
Communicating with a common intermediary is, or at least can be, indirect communication. This was, e.g., the case in the major ebook price fixing case where Apple was the common intermediary between the publishers.
lodovic 3y ago
Everyone is colluding with the middle man