ALGORITHMIC RENTAL PRICING

This Tuesday, expanding upon an antitrust lawsuit filed in August against the company Realpage, the Department of Justice sued six of the largest landlords in the US, with ten states’ Attorney Generals acting as co-plaintiffs. Realpage offers its customers a rental price-setting algorithm for efficient property management, which has provoked allegations of cartel-like behavior among landlords. 

A 2020 paper by EMILIO CALVANO, GIACOMO CALZOLARI, VINCENZO DENICOLÒ, and SERGIO PASTORELLO considers the potential consequences of algorithmic pricing on antitrust policy:

“Today, the prevalent approach to tacit collusion is relatively lenient, in part because tacit collusion among human decision-makers is regarded as extremely difficult to achieve. While we have no direct comparative evidence for algorithms relative to humans, our results suggest that algorithmic collusion might not be that improbable. If this is so, then the advent of algorithmic pricing could well heighten the risk that tolerant antitrust policy will produce too many false negatives.

On the other hand, algorithmic pricing may open the way to new forms of antitrust intervention. When they suspect collusive conduct, agencies and the courts can subpoena and test pricing algorithms in environments that closely replicate the particular industry under investigation. With humans this was not possible, so the risk of aggressive antitrust enforcement producing too many false positives may be reduced. Therefore, the advent of AI pricing could alter the balance between the two types of error, possibly calling for policy adjustment.”

+  Martin Spann et al. provide an extensive review of algorithmic pricing literature. Link. And see Akil Vicks on San Francisco’s banning of revenue management software for rental housing and the housing crisis more broadly. Link.

+  See Curbed’s coverage of algorithmic rental pricing from 2019 on. Link, link, link. And see Propublica’s investigations of Realpage. Link, link, link.

+  “A non-software utilizing landlord will face higher demand when the software-utilizing landlords raise their rents, and find it optimal to raise their prices as well because demand is sufficiently concave (Calder-Wang and Kim, 2024).” From the White House’s CEA blog. Link. And see Sophie Calder-Wang and Gi Heung Kim on the impact of algorithmic pricing on multifamily rental markets. Link.

NEW RESEARCHERS

Teachers’ Unions

MORGAN FOY is a PhD student in the Business and Public Policy group at UC-Berkeley, Haas School of Business. In his job market paper, he examines whether teachers’ unions affect student achievement in Wisconsin.

From the paper:

“I find limited evidence that decertification led to a significant change in the composition of the teaching workforce both on average and with respect to worker performance metrics. Teachers were not more likely to exit the district or the teaching profession. Instead, I find that teachers who stayed present across the pre- and post-decertification periods were more likely to improve in decertified districts relative to certified ones. This implies that the student achievement effects were due to a direct treatment effect of the union. Pinning down the precise mechanisms for these gains is challenging due to the limited range of outcomes in the administrative data. However, I find no evidence that there were changes to total district spending or that districts were more likely to implement pay-for-performance type schemes. Instead, the complementary survey evidence points to the idea that workers lost the ability to access union representation rights in issues with administration.”

+ + + 

+  “Most IRA funds will flow to for-profit institutions equipped to take advantage of tax benefits, not publicly owned or non-profit entities. The mimosas may be bottomless but whether cooperative and public power will liberally imbibe is far from certain.” New on PW, Sandeep Vaheesan compares the New Deal’s electrification program with the Biden administration’s designs for financing the IRA. Link.

+  Nicholas Bloom, Kyle Handley, André Kurmann, and Philip A. Luck revisit the reallocation of US jobs, geographically and in terms of job sector, due to the China shock. Link.

+  “While enhancing American power, the petrodollar inflow also supercharged the financial sector. The inflow enabled the ‘financial sector to unleash itself,’ in the colorful phrase of one official.” By David Gibbs. Link.

+  “Public-private fissuring—combined with labor-law doctrine—frustrates a central objective of labor law itself by depriving care workers of the ability to bargain with public entities that shape their wages and working conditions.” By Kyle Bigley. Link.

+  Noah Gordon, Bentley Allan, Daniel Helmeci, and Jonas Goldman offer a supply chain resilience framework for US industrial strategy. Link.

+  “The FTC found that the three largest PBMs—CVS Caremark, Cigna Group’s Express Scripts and UnitedHealth Group’s Optum Rx—now manage nearly 80 percent of prescriptions filled in the United States.” By  Mike Ludwig. Link.

+  “While the spirit of black consciousness was rising, the ANC and its underground were increasing their propaganda activities. During August 1970 leaflets telling people about armed struggle were distributed in all the major cities. The campaigning was so extensive and effective that it made the headlines of every major newspaper in South Africa, as well as receiving attention abroad. “ANC Shows Its Teeth Again—Bombs in Five Large Cities—State Threatened in Leaflet” were the front page headlines in the Afrikaans Die Transvaler of August 14.” By Bernard Makhosezwe Magubane. Link.

Each week we highlight research from a graduate student, postdoc, or early-career professor. Send us recommendations: editorial@jainfamilyinstitute.org