Company that makes rent-setting software for landlords sued for collusion

RealPage worked with some of the nation’s largest landlords to raise rents, says lawsuit.

Read the whole story

 

[The Dark]

This one is interesting. I did a business exercise a few years ago where we had to figure out if gas stations posting their prices on the signs should count as collusion since their competitors can look and then adjust prices, and if that helps them raise prices and unofficially fix them as a group. This software reminds me of the same thing in that it's just a shortcut to looking at a bunch of price sheets.

Examining competitor's pricing is not collusion, it's an important feature of properly functioning capitalism. Simply put, if you don't know what a competitor is charging, it's difficult to undercut his price. While it's absolutely true that this knowledge can be used to artificially keep prices high, in a competitive market, it almost always has the opposite effect.

The problem with the software isn't that the prices of competitors are identified, it's the encouragement to keep units off the market. That discourages competition.

There's potentially also a problem in using competitors' actual pricing instead of advertised pricing, since that's not generally publicly available information. In fact, it's often the sort of information that gets labeled as proprietary information. I'm sure RealPage will argue that because it's aggregated and customers don't have access to specific competitor data that it's not problematic, but it does remove a level of uncertainty from the competitive environment when compared to a rental company only knowing what its competitors advertise and whatever information potential renters volunteer, which may be wildly out-of-date. If you only know your competitors' advertised pricing, you don't know their discount rates to entice wavering customers. With actual pricing, even if aggregated, you can probably make a pretty good guess at discount rates because there's probably not wild variation in rents within their aggregation areas.