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

 

[TheThirdDictor]

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.

I tend to agree. Gas stations, airlines publishing fares, car dealerships, anyone selling at MSRP (or MSRP + a percentage). All of these things will result in very similar prices for similar services. Explicit collusion, by definition, requires "agreement." I'm not a lawyer, but my understanding (from an economics perspective) is that there are two different types of "collusion": implicit and explicit (or covert versus direct). Explicit is when formal, active coordination takes place and the *goal* is to reduce competition and leverage cartel power to inflate prices.

This doesn't seem like that. This seems more like "tacit" collusion, which occurs when companies monitor each other's prices, and optimize for their *own* needs (some may optimize for margin, some for market share, for example), but that no direct linkage of prices takes place. It's just an emergent property of the economic system.


But this does seem like something "in between". When the software is used by ALL the major market players, and the software maker "strongly recommends" not diverging from the suggested rental, that seems like the companies involved are NOT optimizing for their own utility functions, but rather effectively turning over pricing decisions to a "third party cartel administrator" which explicitly seems to take advantage of the cartel power.

 

[Windchaser]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

I'm all against the collusion from the article, but... what would we go against house flippers for? Genuine question.

 

[luckydob]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

Stop buying 300K houses that sold for 150K a few months earlier?

 

[rosen380]

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.

Oh boy, just wait until you hear that Gas Stations have been using this exact same kind of software for a looooooong time (PriceAdvantage/Kalibrate). No need to even look out the window or adjust the prices yourself!

Most stations don't have the freedom to adjust prices anyway. It's usually set by the suppliers, who quite obviously collude on it. But the stations themselves make very little on gas sales. It's all the other stuff that people come in and buy that makes them money.

Yep. Gas is often sold at or near cost with next to no margin. Almost a loss-leader. That's why all the stuff INSIDE the store is a buck or three more than anywhere else.

At least at the gas station attached convenience store I frequent, things like bread, milk, eggs, brewed coffee, ice cream, newspapers, etc all seem competitively priced with supermarkets.

Bottled sodas *seem* more expensive, but really only when you are comparing a single *cold* bottle at the convenience store to the per bottle price of a warm six pack at the grociery store, which I'm not sure if a fair comparison. Let alone that the grociery store will often have those packs on sale where you have to buy 12-24 bottles total to even get that price.

The things that seem overpriced to me are generally things that I suspect a convenience store can only move at rather low volumes. When I need bacon or mustard or whatever, I'll generlaly just go to a grociery store instead.

 

[fenncruz]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

Stop buying 300K houses that sold for 150K a few months earlier?

Because it's the only house left after the comerical landlords brought everything? I can either pay a landlord a ridiculous price or own a home after paying a ridiculous price.

 

[unequivocal]

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.

It's not the same at all. In the earlier article an expert was quoted suggesting that the algorithm could be replaced with a "guy named Bob" and the problem becomes more obvious.

In the gas station analogy, it would be equivalent to hiring a guy named Bob to set your prices, and Bob also works for your competitors in the area doing the same "service." That's pretty clearly collusion.

 

[S_T_R]

Second reaction: Cartels only have power when there is a shortage.

This is wrong. Cartels exist to control supply regardless of whether or not that supply is constrained by any other force. Tighter supply just makes their job easier, as tight supply shifts power to producers in general.

 

[Grumpus Maximus]

Things are pretty ugly in my town. With borrowing rates being so low, a couple of large investment groups from Denver borrowed a shit ton of money and basically bought up everything up here. From what I've seen, rents are up over 40% in the last 18 months, and there's nothing anybody can do because it's the same people that own everything. I wonder if something like this software gave them the idea that they could walk into the market here and clean up or if they just had the business plan or creating a monopoly.

Not just your town...
https://www.propublica.org/article/when ... r-landlord
https://www.motherjones.com/politics/20 ... m-schumer/
https://www.motherjones.com/politics/20 ... pool-yale/

 

[Dadlyedly]

It is an interesting concept. Indirect collusion through a third party. Collusion may not have even been the original intent, but widespread success in the landlord marketplace has made it a fact.

They have functionally outsourced their collusion to a third party.

 

[ktmglen]

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.

It's not the same at all. In the earlier article an expert was quoted suggesting that the algorithm could be replaced with a "guy named Bob" and the problem becomes more obvious.

In the gas station analogy, it would be equivalent to hiring a guy named Bob to set your prices, and Bob also works for your competitors in the area doing the same "service." That's pretty clearly collusion.

In the tech industry, they call Bob a salary consultant as in we use a salary consultant to set our salaries at competitive market levels.

*Bob also works for our competitors and knows what their salaries are too.

 

[rosen380]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

Stop buying 300K houses that sold for 150K a few months earlier?

Because it's the only house left after the comerical landlords brought everything? I can either pay a landlord a ridiculous price or own a home after paying a ridiculous price.

If they are doubling the sale price by doing virtually nothing to it, then wouldn't it make more sense for them to *literally* do nothing to it?

 

[BasP]

Real estate guys involved in shady business? Quite the surprise!

 

[Uragan]

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.

Oh boy, just wait until you hear that Gas Stations have been using this exact same kind of software for a looooooong time (PriceAdvantage/Kalibrate). No need to even look out the window or adjust the prices yourself!

Maybe you should recommend to ProPublica that they write a story about that too.

(Edit: My comment isn't meant as snark, but a legit statement. If there's a problem with collusion within the gasoline market, that should be brought to light, just like they did with this situation.)

 

[krimhorn]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

I expect the gotcha here to be the access that RealPage has to non-public data. It's basically the same as two landlords not saying they'll collude to raise prices but putting all of their private rental data on the other's doorstep. Makes it really easy to figure out what the other's going to do if you can see all of the information they use to make decisions on and, thus, what you can get away with.

If RealPage only aggregated data they scraped from public sources and then applied an algorithm to find patterns within that data then I don't think there would be much to this lawsuit. As unfair and one-sided as something like that would be I don't think it would fall afoul of any collusion laws.

 

[Delta-Epsilon]

Interesting. When does a 'business idea' become an 'illegal racket'? Is this another sign of 'late stage capitalism'?

When someone’s idea or need to enrich themselves screws everyone else over in a major way. Yes, it’s LSC.

Not here to defend capitalism, but thats like, every idea to enrich ones self since the beginning of time. Early colonialism wasn't capitalism, neither were viking raids. Too broad a definition. Late stage capitalism isn't the first appearance of powerful people screwing everyone they can get their hands on for more power.

"Every idea since the beginning of time" seems over broad though. Surely there are ways to enrich oneself without descending into screwing everyone else over in a major way. Not everything has to be a zero sum game.

That said, avarice and the tragedy of the commons are real things; this is one reason laws and regulations to protect the little guys and the commons are important. Looks like this may be another area where they're playing catch-up to technology.

 

[mjeffer]

Things are pretty ugly in my town. With borrowing rates being so low, a couple of large investment groups from Denver borrowed a shit ton of money and basically bought up everything up here. From what I've seen, rents are up over 40% in the last 18 months, and there's nothing anybody can do because it's the same people that own everything. I wonder if something like this software gave them the idea that they could walk into the market here and clean up or if they just had the business plan or creating a monopoly.

Things have gotten pretty ugly where I am too. I live in an area that was gentrifying before the market heated up and it only got much, much, much worse since. A block down from me a couple moved in 5 years ago after paying low $400k. They sold it a few months ago for $1.1m. Houses that needed to be torn down used to sell for like $25k-50k. Now they're going for 200k. Developers are tearing down all the affordable housing and building upscale apartment/condos near downtown or cookie cutter houses in a lot of other neighborhoods.

Needless to say affordable housing is the issue that everyone is screaming about right now but it seems like nothing is done. The city keeps putting in a few hunderd thosand here and there to go towards it but developers seem to just want to quit projects if they try to force them to add affordable units.

The silly thing is I actually lived in a development in Seattle (not where I am now) that was mixed. It was a town home development where about 30% of the unites were dedicated to section 8/affordable housing and the rest were sold. Everyone there was great, there were zero issues and a lot of people got to live in affordable comfortable housing. Low income people are not untrustworthy or the enemy. They just don't have as much money. We need more places like that.

 

[graylshaped]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

There is a difference between independent companies assessing the market, and a single entity telling them what to charge and discouraging deviation.

This is textbook anticompetition, and I hope their entire business is deemed illegal.

 

[Uragan]

Oh no.

Anyway...

Yes... rental property owners working together to crank up rent to an amount where people feel even more squeezed and/or live from paycheque to paycheque is such a non-problem that we should ignore.

 

[RickRoyLeonPrisZhoraRachael]

Wonder if its applicable to RICO laws since the app was designed to profit from control and literally racketeering. They controlled the rental price markets, and leveraged an application, subscriptions and who know what else (I'm not a landlord but I can imagine corp property managers loving this).

Its like the Mortgage industry by 2008 with price fixing, over-extended loans, sub-prime lending...now we see it with used car markets and this, rental price collusion.

Throw them in prison. And not the golf-course kind.

 

[crmarvin42]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

I won't deny there are some industries like that, but I used to work for a company selling a commodity with only a few big vendors, and we tried pushing through price increases combined with a press release announcing the increase to the market. Instead of following our lead, our competitors dropped prices slightly, and we ended up losing 80% of our volume for the quarter. Didn't get it back until we reversed course and dropped prices below where we'd been before the announced price increase. And we had something like 30% market share before the announcement.

There are times when our prices and competitors prices all went up at the same time, but it was usually when someone's plant was down for whatever reason (repairs, normal upkeep, the olympics shuttering plants in china, etc.). Supply/demand economics do still work most of the time.

 

[Uragan]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

Stop buying 300K houses that sold for 150K a few months earlier?

Because it's the only house left after the comerical landlords brought everything? I can either pay a landlord a ridiculous price or own a home after paying a ridiculous price.

They bought everything? How about looking a few miles outside the area. Sometimes you just have to be willing to compromise.

Except everyone's going to be "looking a few miles outside the area" because a lot of people are being priced out of the market.

 

[Ser Simian]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Frankly, I'd go even further with single-family homes and make it ruinously expensive to own a house you don't live in. Eliminate the so-called passive-income aspect of home ownership and you get rid of landlords sitting on properties for years and letting them slowly decay until they can't squeeze any more money out of them. It'd be a lot easier for folks who just need a place to live if the market wasn't artificially inflated to suit the whims of capital.

I'll admit I don't have as neat a solution for apartments, and I think there should probably be some sort of rental market, but at the end of the day I think we, as a society, are going to have to start treating housing more like a right than a privilege before any of this gets meaningfully sorted out.

 

[nom3ramy]

Strange how the free market always steers towards turning people into serfs. Wonder why that is.

The problem is that we are not focused on exploitation of one person by another, and instead allow ourselves to be diverted to attacking something else. Every system of government or economics eventually devolves into serfdom of the many to hugely raise the living standards of the few if the abuse is not recognized and checked.

Serfdom and exploitation is exactly the goal sought by Russia in invading Ukraine, and its aspirations to expand well beyond that. Socialism, capitalism, anarchy, and all hybrids have similar problems with this.

That problem is to try to build a system that allows each approach to contribute to the benefit of all, but have built-in checks for when each process progresses into its destructive phase. A real challenge is to design these checks so that they prevent abuse without blocking universally-beneficial progress, and to prevent checks from being removed or made irrelevant by those benefiting from the abuse.

Enforcing laws preventing collusion to artificially keep raising essential living costs for the many is a useful start.

 

[lordcheeto]

Interesting. When does a 'business idea' become an 'illegal racket'? Is this another sign of 'late stage capitalism'?

It's always been a thin line. Most of our terms (including "racket") for cartel-like activity date from a far earlier time. It's not so much "late stage capitalism" so much as "the eternal vigilance required to keep capitalism from turning into feudalism."

Yeah, decades of Republican propaganda have obfuscated the fact that this is an adversarial relationship.

 

[Uragan]

This app certainly doesn’t help, but housing becoming a speculative asset to put money in and not a roof over your head is what caused this.

Break the big conglomerates and ban things like hotel houses and that will also help a lot.

Frankly, I'd go even further with single-family homes and make it ruinously expensive to own a house you don't live in. Eliminate the so-called passive-income aspect of home ownership and you get rid of landlords sitting on properties for years and letting them slowly decay until they can't squeeze any more money out of them. It'd be a lot easier for folks who just need a place to live if the market wasn't artificially inflated to suit the whims of capital.

I'll admit I don't have as neat a solution for apartments, and I think there should probably be some sort of rental market, but at the end of the day I think we, as a society, are going to have to start treating housing more like a right than a privilege before any of this gets meaningfully sorted out.

The PC government here actually did that, but who knows if that will actually do anything. (They predicted that it would take about two years to see the results of their tax plan.)

Honestly, I'd say that it is doubtful that it will have any meaningful impact though. Resale home prices were up 28% in 2021 from 2020. That is just eyewateringly crazy.

 

[forkspoon]

I find this morally offensive. And predictable.

Because aren’t we in an age where any half hearted defence of price gouging is accepted? “Whatever the market will bear!”, defenders will cry.

Perhaps these companies can even take a page from the pharma playbook and say they need to cover the R&D costs… of developing the AI itself.

Argh, I’m too cynical for 830am. Time for coffee.

 

[Polama]

Interesting. When does a 'business idea' become an 'illegal racket'? Is this another sign of 'late stage capitalism'?

It's that this 3rd party was using non-public data across _different_ landlords to help set prices. Effectively helping the landlords form a cartel to help set prices higher than they otherwise have been. Also it pushed landlords to keep some units vacant in order to help push prices higher which contributes to the housing shortage.

Basically it ended up having the big landlords collude into setting higher prices through private data sharing and artificially reducing supply so the Market couldn't actually set real supply & demand rates.

If you read further, it also kept pushing higher yearly rent raises higher than humans would have, which was influenced by all that non-public data.

If the software used public data and _only_ the individual landlords data for each landlord, that'd have been a lot different.

I don't think the non-public data is even necessary in this case. It's like the prisoner's dilemma - If everyone on the supply side raises rents 80% yoy, they all profit immensely. But if it's just you, nobody leases your apartments and you go bankrupt (or promptly reverse course and maybe even cut rents because you're bleeding cash and need heads in those beds).

So - you can look in the classifieds and maybe even make some quiet phone calls to the competitors and see what market rate is and price accordingly - but are you going to risk being the only one to try to reset the market rate higher?

On the other hand - if you're confident that prices are going up across the entire market next month, because that's what the algorithm told you, and you know it told all your competitors, and everyone on the supply side would be much happier if it went up? Now it's easy. The price shift has been coordinated.

 

[Eurynom0s]

Things are pretty ugly in my town. With borrowing rates being so low, a couple of large investment groups from Denver borrowed a shit ton of money and basically bought up everything up here. From what I've seen, rents are up over 40% in the last 18 months, and there's nothing anybody can do because it's the same people that own everything. I wonder if something like this software gave them the idea that they could walk into the market here and clean up or if they just had the business plan or creating a monopoly.

And the only way to fight them is have the economy tank, people go homeless, and those stupid investment groups go upsidedown.

Freakin 2008 all over again.

Or just fix our fucked up zoning codes across the country so that there's a lot of new housing supply. These investment groups getting into housing put it right in their prospectuses that they think housing is a good investment because they expect the crisis-level undersupply of new housing to continue indefinitely.

Something like 90% of the occupied land in their US is zones exclusively for single family homes. Including for instance places right next to light rail stations here in the Los Angeles area. It's ILLEGAL to build more than a SFH on most of this land, SB9 in California notwithstanding. So yeah no duh finance is interested and landlords are able to collude on ratcheting up rents, that's what happens when you create crisis-level scarcity of a necessary good. This software is making things worse, but it's not the root cause of housing unaffordability, this company's business model wouldn't work in a situation where we were constantly building a healthy supply of new housing.

This also feeds into the climate crisis. Santa Monica has a daytime population of 250k and a nighttime population of 90k (the latter is about the same as it was in 1970). Most of this is because we took in a ton of new jobs while barely building any housing. It's not a coincidence that even by Los Angeles standards, Santa Monica is notorious for extremely bad traffic, although I'll say that traffic is really only on streets headed to the freeways, it's rarely ever that bad driving around locally. Which is another strong hint about what's creating the traffic. And all of those people driving in are spewing tons of fumes into the atmosphere because we refuse to let them live within walking distance of work (or at least walking distance of a transit station that can get them to work).

 

[Uragan]

Next go after the airbnb and the home flippers. If you look at realstate listing, you literally see flippers taking 150k houses, apply fake wood floor and coat of paint then flipping it for 300k.

Stop buying 300K houses that sold for 150K a few months earlier?

Do your homework when buying. Too many impulse sign because constrained inventory, pressure by realtors and others outbidding. Now we have Private Equity firms joining in the home purchasing to create portfolio of either rentals and/or resale to be the mortgager. Why have a lender like a bank (mortgages get traded like herpes nowadays) making the money when some PE can.

And about Flippers, go after the advertisers that sponsor these programs on cable. And states/counties that care more about making money off RADON tests than shoddy window installers.

Since you agree that it's a seller's market, me doing my homework may mean that someone else might swoop in and put in an offer on the property sight unseen.

 

[killerhurtalot]

The lawsuit said that RealPage’s software helps stagger lease renewals to artificially smooth out natural imbalances in supply and demand, which discourages landlords from undercutting pricing achieved by the cartel. Property managers “thus held vacant rental units unoccupied for periods of time (rejecting the historical adage to keep the ‘heads in the beds’) to ensure that, collectively, there is not one period in which the market faces an oversupply of residential real estate properties for lease, keeping prices higher,” it said. Such staggering helped the group avoid “a race to the bottom” on rents, the lawsuit said.

Ok, I've worked with a small/mid sized property managent company before and this doesn't have anything to do with avoiding over supply... it's a employment/time issue... if literally everyone moved out on the last day of the month, they would literally be crushed with the workload of having to do all the move out inspections, schedule for repairs, and etc all at the same time. This is necessary because most states have a timeline for when the inspections and repairs have to be done by otherwise the security deposit is forefit/there's a fine for witholding it withiut reason after that.

It's not like they have infinite property managers, handyman, and etc just waiting around to take up jobs...

A lot of the rest of the article I can agree with though, the larger companies that owns apartments and etc are usually the ones pushing up the rent. The smaller ones are just following in their foot steps... (most smaller companies literally just go on zillow and look around for prices and then adjust for the properties that haven't been rented out yet)

Edit: words

 

[munnabhaibtech]

It's not just the prices. The article mentions staggering lease renewals. I rented from greystar a few years ago and they initially gave me a 11 month lease, which seemed like an odd unit of time to pick (but where happy to renew). I assumed they wanted to avoid rental protections for longer term leases but after reading this they probebrly wanted to stagger the start/end dates to artificialy drive the supply/demand curve.

When Greystar took over the apartment building I was renting in (from another large but local landlord corporation), the very first thing they tried was to convince me to renew my lease for an oddball 15 months. NYC landlords go out of the way to end their tenants' lease between May and August so that the demand is concentrated and they can command higher rents, but Greystar was unusually aggressive about that.

Edit: Repeated words

 

[HiredGoons]

Is this why studio apartments in virtually every city in the country start off as no less than $1000 a month for something that's not a rat infested shithole? Regardless if the price makes any sense for that given location?

 

[MonkeyPushButton]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

Yeah, it's real mysterious how all the cell phones plans in Canada are near identical and massively overpriced.

 

[cmacd]

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.

It's not the same at all. In the earlier article an expert was quoted suggesting that the algorithm could be replaced with a "guy named Bob" and the problem becomes more obvious.

In the gas station analogy, it would be equivalent to hiring a guy named Bob to set your prices, and Bob also works for your competitors in the area doing the same "service." That's pretty clearly collusion.

Yes and no, it depends what Bob is doing.

If Bob is simply using vacancy rates and reported monthly rents to calculate the optimal rent and vacancy rate to maximize revenue across a given slate of units, is it really collusion?

Ultimately what Bob is doing here is calculating the fair market rent based on aggregated information, and providing that information to landlords. Those landlords are then free to act on that information as they please. Any given landlord is free to defect and charge X% less (or more) if they choose. Which is the key, Bob does not actually set anybody's prices. He merely suggests, at any given moment, what the optimal price appears to be based on data.

EDIT: Reading further comments, I'm seeing the fundamental different now; in this situation "Bob" is acting on proprietary information rather than public information If these companies only aggregated public listing information I'd have a point, but by collating data that is otherwise private...including data that purchasers have no abilityto see...it definitely creates something closer to collusion-by-proxy.

 

[JohnDeL]

In a whole lot of industries, there is a sort of "soft cartel" anyhow. I mean, I do hope they bust this app and the landlords using it, but. . .

In most industries, there is at the minimum, all participants tracking the pricing of "the market" and raising prices accordingly.

I won't deny there are some industries like that, but I used to work for a company selling a commodity with only a few big vendors, and we tried pushing through price increases combined with a press release announcing the increase to the market. Instead of following our lead, our competitors dropped prices slightly, and we ended up losing 80% of our volume for the quarter. Didn't get it back until we reversed course and dropped prices below where we'd been before the announced price increase. And we had something like 30% market share before the announcement.

There are times when our prices and competitors prices all went up at the same time, but it was usually when someone's plant was down for whatever reason (repairs, normal upkeep, the olympics shuttering plants in china, etc.). Supply/demand economics do still work most of the time.

Airlines and other large businesses often do this sort of price signaling. Southwest will raise (or, less frequently, lower) the price on a given route and wait to see if their competitors match the change in price. If they do, then the new price becomes the new price.