5 ms·
The whole idea of anti-monopoly laws is to prevent price fixing by market, and there are numerous (illegal) ways to do that: being a monopoly and using that pos
by olliej 3y ago
The whole idea of anti-monopoly laws is to prevent price fixing by market, and there are numerous (illegal) ways to do that: being a monopoly and using that position to set prices that are not representative of market value (both buying and selling. Iirc antitrust in the us started as a result of standard oil setting the price oil would be bought from suppliers).
Another illegal option is collusion. That is a group of competitors get together and set a price that they will all use, again independent of actual
Market value, just because the colluders have sufficient control of a market that when they set a price people have no choice but to pay it. This is super effective when the market it not fundamentally “free” like housing, gas, power, healthcare, etc.
What these companies are doing is providing a tool to launder the collusion between competitors in a market, by having every “competitor” in the market get an “algorithmic” price that is fundamentally tied to the “algorithmic” price they provide every other “competitor”.
If these landlords got together in a room and decided the prices as is happening here, it would be more or less immediately subjected to scrutiny. By doing the same thing via a third party and calling it an “algorithm” it is somehow not subject to the same restrictions.
- Geisterde 3y agoBy the time the lawsuit against standard oil had concluded, they had lost market share, because price fixing doesnt work in real life, as more than a few industrialists have had to learn the hard way. Rents and mortgages are too high, but you are looking in the wrong place thinking housing costs are high due to price fixing.
- fireflash38 3y agoDo you have some papers to back up the claims that price fixing doesn't work?
- Geisterde 3y agoSure, I would recommend you start with "basic economics", 5th edition, by thomas sowell.
- ethbr1 3y agoAre you speaking in the long term? Because it certainly works over decades-term. Standard still had 70% market share when it was charged, and 64% by the time it was broken up. Over the ~40 years it existed, it was incredibly profitable.
- Geisterde 3y agoI submit that the long term issues we are having in the united states, are in fact the result of short term solutions. Also, standard oil controlled more like 90% of the market, so in that context they had lost more like 25% by the time the trial concluded.
- ethbr1 3y ago64% is still an incredible pricing and profitability position. Most firms would kill to be in such a situation! Apple has, what, 20% smartphone market share? And look at the margins they're able to run. Granted, boosted by platform lock-in.
- Geisterde 3y agoExcept, at 64% its not really fixing prices, is it?
- ethbr1 3y agoYour assertion was "price fixing doesnt work in real life". I offer that if you get to fix prices for a good chunk of 40 years, and then still end up with 64% market share... it does work. In the sense that your company will have made obscene amounts of money, by price fixing, while the above played out. If your rebuttal is that in the end they lost market share, true. But they made enough money before that happened that it's still a win.
- devilbunny 3y agoI'm pretty pro-market, but Standard Oil used a lot of techniques to fix prices. Having a lot of refinery control and the ability to undercut anyone who didn't play ball with them (and thus kill the small independent) did happen. They didn't need a true monopoly, just enough power to tank any smaller company that tried to undercut them. If you're interested in the subject, The Prize: The Epic Quest for Oil, Money, and Power by Daniel Yergin is a fascinating read.
- BoiledCabbage 3y ago> price fixing doesnt work in real life Yeah you're gonna need some pretty strong support to make a claim like that - and not just an anecdote from the internet. Do you have any new proof upending long solidified economics?