Jan 06, 2026
On January 6, The Capitol Forum held a conference call with Dr. Hal Singer, an expert in antitrust, consumer protection, and regulatory economics, for a discussion on the competitive and legal implications of Airbnb’s pricing practices. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Good morning, everybody, and welcome. I’m Teddy Downey, Executive Editor at The Capitol Forum. Our guest today is a longtime friend of The Capitol Forum, Dr. Hal Singer. And we’re going to be discussing the antitrust case against Airbnb, a piece Hal recently wrote in The Sling, an economic analysis and competition policy research blog. Is it a blog, Hal? Is that fair to say it’s a blog?
DR. HAL SINGER: It’s a blog. We’re just making this stuff up. But sure, blog is fine.
TEDDY DOWNEY: Hal is Managing Director at EconOne, where he provides expert economic and policy advice to regulatory agencies in the U.S. and Canada. He is also a Professor of Economics at the University of Utah, and Director of the Utah Project, an interdisciplinary institute focused on antitrust and consumer protection. Hal, it’s great to see you, and thank you so much for doing this today.
DR. HAL SINGER: Yeah, this could be a lot of fun. We’ll see how it goes.
TEDDY DOWNEY: And the Sling is very influential. I don’t want to downplay it by calling it a blog. It’s a very influential blog where opinion pieces are written about very key antitrust and consumer protection issues. So, I don’t want to downplay it by calling it a blog. I have a lot of respect for blogs. I grew up with them. I know maybe that is not the case for everyone in the audience, but just to clarify.
But Hal, onto the topic at hand today, Airbnb. How did you even think to write about Airbnb? How did this come up? I mean, I know housing pricing is in the news. I know Airbnb has been tied to those debates in the past, but why Airbnb and why now?
DR. HAL SINGER: I was looking for an application of a common pricing algorithm. And I actually had some conversations with Lee Hepner, and I think he turned me on to it. And so, we started looking into the smart pricing feature on Airbnb. But I worry that this is just the tip of the iceberg. I feel like common pricing algorithms are endemic to our economy now. And I feel like regulators and courts are just five steps behind what’s happening. Airbnb is just an illustrative case. I think what they’re doing is bad, but I fear it’s no worse than what we are being subjected to as consumers on a day-to-day basis.
TEDDY DOWNEY: Yeah, there are a lot of algorithms. There’s a lot of algorithmic pricing going on. So, a lot to talk about here. And what did you find in the paper? What are some of the highlights of what you found? And then maybe we can dig into some of the antitrust case law and stuff like that.
DR. HAL SINGER: Yeah, so Airbnb is incentivizing—and some would say coercing—its home sharers to turn over their pricing decisions to Airbnb. As an economist, that throws up red flags. Because I’m worried now that, as consumers, we don’t get to enjoy the normal rivalry that occurs when independent sellers—in this case home sharers—are making their own kind of unilateral pricing decisions.
Once you turn it over to a common agent to make those decisions, it just becomes kind of obvious to me at least, as an economist, that it’s much easier to arrive at a jointly profit-maximizing or monopoly outcome. And this is going to be a bad thing for consumers. And I’m worried, when I look at certain cases—and maybe we’ll get into some of the cases—that the cases are just using the wrong lens to make these assessments.
And my other worry is just that antitrust just moves so slowly. If we’re talking three or five years to prosecute a price-fixing case, I mean, the harm that is inflicted in the interim is unfathomable. It should be intolerable for us as a society, but we seem to go along with it.
TEDDY DOWNEY: Yeah, I mean, in your paper, you even mentioned that—I forget, where was it? Was it just New York? Yeah. Even if you take out the algorithm pushing the price up, just the existence of Airbnb costs renters $200 million a year in New York. So, just the existence of this platform is creating housing costs to go up for renters.
DR. HAL SINGER: Right. And I put that in there as atmospherics, right? This isn’t really something that you could bring. That effect—even though it’s restricting output and pushing up prices for rents, that by itself, I mean, their entire business model—is arguably anti-competitive, but that’s not cognizable, I would submit, in an antitrust court, just the mere fact of what they’re doing, which is converting long-term rentals, right? They’re moving capacity—that would otherwise be rented as a long-term, say, a monthly or yearly rent into short-term, say, weekly or daily rentals—that entire business model is putting upward pressure on rents, which I think is bad.
TEDDY DOWNEY: Let’s stay on this for a second. Let’s fully just vet this before we move into the antitrust stuff.
DR. HAL SINGER: Yeah.
TEDDY DOWNEY: The Abundance Bros are out here with their solutions on housing pricing. But it’s very clear that—however poorly researched that work is, and we’ve done a couple of podcasts on that—but affordability clearly is a hot political topic. Rent prices is a hot political topic. We have Mamdani in New York now. We have the President’s people saying that affordability is going to be big midterm election issue. Congress seems set on that as well.
And you mentioned in the paper, there are reforms out there to limit Airbnb’s short-term rentals, right? Putting curbs on it, prohibiting it. So, while the antitrust laws might not apply, if you are a mayor or a state legislator and you’re looking to put $200 million a year back in the pockets of renters in an affordability crisis, you’ve got a tab right there that you can pull on, boom, like prohibit or limit Airbnb. I mean, is that not a fair way to think about it?
DR. HAL SINGER: Oh, absolutely in favor of that. And yes, I mean, I am speaking, I guess, to multiple audiences here. But yes, if you’re a mayor and we look what New York’s done, New Orleans has done, I think Barcelona is the most aggressive, but they’re basically throwing up a bunch of hurdles to stop this process, this conversion of the capacity. We want capacity to be there. The abundance bros ought to like capacity, but what this business model is doing is removing capacity from the rental markets, right? It’s moving it from a long-term rental into the short-term. So, absolutely, yes, from the mayor’s perspective, they don’t have to mount an antitrust case. If they just want to put money back in the pockets of their residents, they could throw roadblocks into Airbnb, absolutely.
TEDDY DOWNEY: Yeah, and so before we even get into the antitrust case, which I’m excited to get into the weeds in, if we’re thinking about political risk to Airbnb, we’re thinking state legislatures, new mayors. And Mamdani really is really the tip of the spear when it comes to affordability solutions. Obviously, he ran on that and won and has an aggressive menu of options that he’s looking into, already has some executive orders limiting junk fees. Which by the way, Airbnb, I mean, I don’t know if you’ve used it lately, but the fees at Airbnb are just absolutely, absolutely astronomical. I don’t even know what the percentage of my rental anymore is fees.
So, I just think, before we even get to the antitrust case, you’re pointing out huge economic ramifications from Airbnb’s presence in the market, seems like a risk worth monitoring. Is that a fair way to say it?
DR. HAL SINGER: Oh, absolutely. And I also think that—I got beat up a little bit. There was an economist on Twitter who came after me for even mentioning this in the background section. And he thought I was trying to inflame the sensitivities before assessing the antitrust case in a dispassionate way. But I think it’s actually relevant, right? If the business model, if the underlying business model, is itself anti-competitive, in the sense that it’s putting upward pressure on prices by restricting output in the rental markets, I think the court should know that. And that by itself may not be cognizable, but as a background here, why not? Why not explain to the court that these guys—just in the presence of their business model—are putting upward pressure on rents.
TEDDY DOWNEY: I mean, if the business model is banned or prohibited or curbed in certain places, I mean, we have gambling, we have other business models, curbed that way. And that absolutely will play into how a judge thinks about whether or not legally occurred should be placed on that type of conduct.
DR. HAL SINGER: Can I just say one thing quickly? I mean, on this point, there’s a lot of defenders at Airbnb who like to point out that while they might be inflicting harms in the rental markets, they’re doing overnight guests, like foreign visitors, a favor by putting competitive pressures on the hotel rates. I don’t know if you’ve seen this argument before.
TEDDY DOWNEY: I’ve seen every argument, yeah.
DR. HAL SINGER: Okay, I would consider this argument to be an offset argument. They’re basically saying that there’s a balancing here and there’s winners and losers. But as you know, Teddy, as in an antitrust court, there is no occasion for balancing. If we have a harmed class of consumers, we can’t offset their harms with purported benefits to some distinct set of users. In this case, foreigners who are visiting the city. So, I just want to point that out. There’s no way to transfer the surplus of the winners to the harms of the losers here.
TEDDY DOWNEY: There’s even a less justifiable rationale, which is that some owner benefits from being able to make more money off of their rental, which, okay, but they still have the option to rent it long-term or sell it. So, they’re kind of acknowledging that. But in that respect, you’re obviously doing a wealth transfer from the renter to the owner, which I think is politically a non-starter right now, at least when you’re arguing to a mayor or state legislator concerned about affordability.
So, all that said, back to the antitrust merits. Typically, when we see an algorithmic pricing case, oftentimes, it will be between these big companies using some kind of centralized data, some sort of centralized algorithm. In this case, we have the—really, it’s just like one algorithm managing all the owners, right? So, it’s a little bit different. Tell us about how the algorithm works at Airbnb and how you think of that as being a problem from an antitrust standpoint.
DR. HAL SINGER: I think that what the algorithm is doing—and Ted Tatos has a piece out now and he’s got a longer section on Airbnb—but I think what it’s doing, it’s trying to find peers or comparables to your property, even if they’re 100 miles away, and they’re trying to use those peers as a benchmark for what your prices should be. I mean, I think they’re looking for a basis or justification for raising the price effectively.
So, that’s what’s happening in a large picture. I think in a more kind of micro level you are turning over competitively sensitive information to Airbnb when you put your property up for the market. I’m talking about from the home sharer’s perspective. And I think that the most obvious place to start is that you and only you know the number of days that you’re willing to vacate your property, right?
Some people buy a property, say a ski property, and they know they’re going to be there for a certain number of days, but that’s competitively sensitive information. And to put it in the language of the now retracted horizontal collaboration guidelines, that is information about future capacity that can only be known to that one seller. So, that sort of information is being shared with Airbnb and Airbnb, of course, is making use of that collective information across all sellers on its platform.
And so, if you believe—and I don’t—that sharing of competitively sensitive information—which I’m going to call CSI from now on because it’s a mouthful—is a necessary element—I think it should be a sufficient, but not a necessary element—then we should have that in spades here.
TEDDY DOWNEY: I guess one thing that kind of stood out to me is it’s a lot easier for a law enforcement official to go whack three big companies, or two big companies, or one big company. So, it’s easy. I think it’s a lot easier to whack one company or three companies, right? So, it’d be easier to bring a case against Airbnb, a case against three big companies.
But do you have to sue Airbnb and the homeowners, because they’re the ones sharing the information? Or can you just sue Airbnb for like kind of unilaterally using this pricing algorithm? I’m curious how you think about that. Because, certainly some of the inputs, you’ve got the competitively sensitive information. You’ve got Airbnb with the algorithm. The algorithm obviously is the problematic thing itself. But how would you craft a case here?
DR. HAL SINGER: Yeah, it’s interesting. That’s a legal question, and you’re speaking to an economist. But based on my experience in cases, I have seen not only the platform owner, but also the sellers being named as codefendants. I realize that would be a bit of a pain in the butt here, because you’re going to have thousands of sellers, independent sellers, on this platform. But that’s been my experience. I’ve seen them both be named. Yes, because they are being organized effectively in a cartel through the smart pricing algorithm.
TEDDY DOWNEY: Yeah. And also, I’m sure there are some big property owners where there are a bunch of them putting their stuff on Airbnb. You don’t have to go after a bunch of – Yeah, maybe that’s an easier way to do it if you pick on the big ones. Now, you spent a lot of time going through some problematic case law. I think you described the legal environment as friendly to defendants. I guess my thinking is it’s more kind of just an up in the air time. You have all these cases. Not a lot of them have been decided. Some are on a good track. Some are on a bad track. I think internally here we think of it as a bit of a jump ball across the spectrum of all the cases on algorithmic price fixing. But I’m curious how you ended up saying it was kind of a defense friendly environment.
DR. HAL SINGER: Sure.
TEDDY DOWNEY: From a legal standpoint.
DR. HAL SINGER: Yeah. So, I’m really focused on one case in particular. But it happens to be a big one because it was in the Ninth Circuit. And that’s the Cendyn decision. And so, I am worried when I read that case. I’m worried about the future of cases, at least brought in the Ninth Circuit, until that decision is overturned. Now there’s a request that it be heard en banc by the entire Ninth Circuit.
And so, I got to read AAI’s brief, American Antitrust Institute’s brief. I commend people to go out and read that to see how the panel got it wrong. But I was just reading it from an economic perspective and I was a bit dismayed or disappointed by some of the economic logic that was used there.
I don’t want to kill you guys but there was one point where they said that the software is not an input into the production of rooms for—this was in Vegas for hotel rooms. But, of course, the relevant output market is not the production of a room. It’s the rental of a room on a short run basis, right? And so, in that sense, the software absolutely is an input.
So, I don’t know how they got into production, like the physical production of hotels or rooms, as being the relevant output market. That was just one example. There are many and I reviewed others. The Cendyn decision, like the RealPage decision seems, to be caught up on this notion of sharing CSI as a necessary element. And I think that, while that is a very well-traversed pathway to establishing antitrust liability in a courtroom, I’m concerned that it shouldn’t be understood as a necessary condition. It should just be a sufficient condition. There are other pathways to demonstrate anti-competitive effects here.
Certainly, you could start with a market where there’s no CSI sharing. Everything is publicly known, right? But individual small atomistic sellers are competing against each other, undercutting each other. Now we’re going to turn over all that pricing decision to a third-party who can now choose the jointly profit maximizing price. And I would say that’s a bad outcome. If you get higher prices, it doesn’t matter if CSI has been shared.
So, it’s a long way of saying, I worry that the courts are just not keeping up with the danger that is presented by these common pricing algorithms.
TEDDY DOWNEY: Is there anything specific to this algorithm or Airbnb in particular that jumped out at you, the way their algorithm works, the way the recommendation works, the way that you mentioned they basically threatened to lower you in the rankings or imply that you’re going to get worse discovery for your property if you don’t go along with their algorithm. What jumps out to you as particularly problematic or that puts this—in addition to the politics around rent prices—that makes this an attractive algorithm to potentially litigate against?
DR. HAL SINGER: Yeah, first anecdotal, and then I’ll get back to the point you raised. But anecdotally, we found some examples of home sharers complaining that the prices that were being chosen were typically in the high end of the range that they had tolerated. And so, that’s the first thing.
But the second thing, and probably more important, is the one you mentioned, this notion of coercion, right? That is, yes, you can defect. You can use your own pricing agent. You can put on different bells and whistles. But it’s very clear within the app that if you do so, that you risk being downgraded in search results. And so, search is key. I mean, this is the same kind of stuff that Amazon uses to induce merchants to say take Amazon’s fulfillment services. But here, it seems like if you don’t turn over your pricing authority to Airbnb and make use of its smart pricing algorithm, then you could be penalized.
And so, there’s an element of coercion there. And if you think that you pretty much have to make use of smart pricing as a condition of just putting your stuff, your inventory, on the platform, then I worry they could cajole a whole bunch of independent sellers into a high-priced monopoly-like outcome.
I’ll just say this point—I hope it’s not too controversial—but Airbnb is making its commission as a percentage of sales, right? And all things being equal, if you hold the output equal, higher prices lead to higher commissions. So, I mean, Airbnb wants higher prices. The sellers, if they know that their competitors are going to undercut them because they’re turning over their pricing authority to this common agent, it’s just going to be easier to get to a high-price equilibrium.
TEDDY DOWNEY: Also, there are some similarities with some of the RealPage issues in that instead of creating an incentive to rent everything out, to have the price meet it so that there are a bunch of—everyone’s getting paid. There are some really bad outcomes for individual homeowners. If Airbnb is happy to have more vacancies and keep the price high and make more money that way than renting more, they’ll do that if they’re going to make more money that way.
We saw that with RealPage, completely upended the incentives in the rental market. Where instead of focusing on having your vacancy rates be as low as possible, you’re okay with five, six, eight percent. I don’t know what the percentage of the vacancy was okay for RealPage and the property owners. But you’ve all of a sudden completely perverted a market based on incentives.
DR. HAL SINGER: Absolutely.
TEDDY DOWNEY: And so, you see that here, but in that case the property owners were also making out like bandits. In this case, you could actually be punishing some of the users.
DR. HAL SINGER: But when you say punishing the users?
TEDDY DOWNEY: I mean, you could be punishing some of the homeowners because they might want—if they are the one that doesn’t get rented, they’re actually completely out of luck. They don’t make any money.
DR. HAL SINGER: That’s right.
TEDDY DOWNEY: So, it’s not even you’ve got both the consumer and some of the sellers on the platform being harmed.
DR. HAL SINGER: Yeah, that’s the problem is, again, if we go back to the individual decision-making, right? You’d want to cut out that vacancy. You don’t want to leave a place open. You’d rather make something. And I feel like if Airbnb can cajole and coordinate these folks into some monopoly-like equilibrium where you have some excess vacancy, it’s better for everyone. It’s better for the joint profit maximizing. And that’s the concern.
TEDDY DOWNEY: I find this all deeply problematic just from the incentives, creating the incentives, to be misaligned for the citizen. But if we go back to what you said before, you mentioned anecdotally there were some parameters that could be set, that you’re encouraged to price things at the high end. Can we talk a little bit more about that and like why that’s a problem?
DR. HAL SINGER: Yeah, there’s some discretion that you get, even within smart pricing, as I understand it. You can set some parameters. But if you turn certain knobs certain ways, you can be punished in search. But what these homeowners were complaining about on some online forums was that they noticed that Airbnb kept taking the price to the high end of the range, right? And an individual homeowner might not do the same if, as we just discussed, they wanted to rent the property.
TEDDY DOWNEY: Got it. So, the algorithm was pushing the price higher.
DR. HAL SINGER: Correct.
TEDDY DOWNEY: Higher than they wanted necessarily to rent.
DR. HAL SINGER: Correct.
TEDDY DOWNEY: That seems like pretty obviously problematic from an antitrust standpoint.
DR. HAL SINGER: Yeah, and if I could advise the courts on this, I just wish that what they would focus on is the price effect, right? Set aside this competitively sensitive information. It’s here, right? But set that aside. What we really want to know is can we isolate the causal connection between the use of, say, smart pricing and higher prices on Airbnb? To me, if an economist can demonstrate the causal nexus between those two and prices are inflated as a result, we have anti-competitive effects, right? That to me should be the ballgame.
And it seems like what the court, at least in Cendyn, is more fixated on is whether or not they can establish things like CSI or other boxes they’re trying to check. And I just am submitting a suggestion, maybe we should focus instead on the prize. The prize is were prices inflated as a result of the scheme, right? If the answer is yes, then we should be able to get to liability.
TEDDY DOWNEY: I mean, not only from an economic standpoint, but like, okay. If we look at the documents, how do they design this? Obviously, often the CSI is not going to be central to—they’re going to talk about why they did the algorithm this way. I mean, Google and Amazon, there were all these documents about how they manipulate the algorithm to make more money, to get the prices up.
DR. HAL SINGER: Sure. And we can’t lose sight of the fact they’re working on a commission basis too, right? And so, we see these problems kind of crop up throughout the economy. PBMs, for example, are getting percentages based on the price of the drugs, right? And so, the concern here is that, does the platform have incentives to steer its sellers to higher prices? And I think the answer is a resounding yes.
TEDDY DOWNEY: Anything else on the antitrust front? I want to touch on a few other tangential things in your paper. But on the antitrust case, any other cases, any other elements, that you think, when we’re talking about algorithmic price fixing in particular, that this market is instructive for that, for our listeners?
DR. HAL SINGER: Well, I mean, if one were to pursue such a case, there would be a fight over whether or not it would be subjected to the per se standard or the rule of reason standard. And I deal with that a bit in the piece. I found one estimate of Airbnb’s share, if you go down the rule of reason path. And I think that it vastly understates the true share in a relevant antitrust market because it includes, I think, individual direct sales. But that share put it around 43 percent. So, I can imagine there being a fight over which standard to use. And if so, how would you demonstrate that Airbnb has market power in a relevant antitrust market?
TEDDY DOWNEY: Yeah, like you said, in a lot of these cases, the rubber meets the road on that CSI question on the antitrust. So, I think that is pretty compelling. Is there anything else on the CSI issue where—you mentioned when renters are not going to put supply on the market as being competitive incentive? Are there any others?
DR. HAL SINGER: I think that’s the best shot. I think that’s the best shot. To the extent you need to check this box, the CSI box, I think that where I would go digging is information that a home sharer gives to Airbnb as to the number of days in the year and the times in the year in which the home owner is willing to vacate the property. I think that’s the type of information that can only be known to the homeowner. And if that’s shared with Airbnb, then Airbnb can make use of that CSI and basically simulate what would be a jointly profit maximizing price and output decision.
TEDDY DOWNEY: I want to go a little bit beyond just the antitrust laws. In the paper, you say antitrust laws generally condone price discrimination. Obviously, we have anti-price discrimination laws on the books that have an antitrust element. We’ve got Packers and Stockyards. We’ve got Robinson-Patman. We have Section 5 of the FTC Act. We have non-antitrust statutes. You’ve got consumer protection, and unfair practices laws. When you’re looking at the type of price discrimination that you’re seeing in—I guess, let’s start off with why do you say that the antitrust laws don’t generally – generally, that they’re okay with price discrimination?
DR. HAL SINGER: I should clarify when I’m saying that I’m thinking about the Sherman Act in particular. So, yeah, I see all the types of laws that you just listed, Robinson-Patman, are things that were intended to fill a gap in what was otherwise leftover space that wasn’t covered by the Sherman Act. It’s just my experience going into a court that pointing to someone charging two different prices, say based on the user’s characteristics, would not be cognizable, at least under the Sherman Act. That’s my contention. It’s possible, as you say, that you could pursue some of this price discrimination under different laws. And so, we do know for a fact that Airbnb is looking at the renter’s characteristics in informing its pricing for the smart pricing.
And remember, Groundwork Collaborative and More Perfect Union put out the piece about Instacart, which was using different characteristics of the buyers to come up with the price. That’s certainly offensive. It’s offensive for a lot of different reasons. And my point was whether or not you could challenge that price discrimination under the Sherman Act could be a difficult thing.
TEDDY DOWNEY: In the audience, we’ve probably got some state and federal enforcers, some private plaintiffs. So, the point is more, you’ve got to get into the weeds here on—you’re not going to be focused on price discrimination. You’re going to be focused on Section 1, price fixing, if you’re looking at the Sherman Act
DR. HAL SINGER: Sure.
TEDDY DOWNEY: But if you’re willing to go beyond that, if you’re really trying to stop this conduct as a state or local or federal official, you have other tools in the toolbox. Is that a fair way to characterize?
DR. HAL SINGER: Oh, absolutely. I mean, if a city or a state wanted just to ban surveillance pricing or to ban discriminatory pricing based on the buyer’s characteristics, yeah, I think they’re free to do that. And I think I would encourage them to do so. When I wrote this piece, I was thinking about what kind of arguments would you want to make in front of an antitrust court? Yes.
TEDDY DOWNEY: I mean, it makes sense. You’re an antitrust economist. Could be an interesting case where it’s come up with a private plaintiff. I’m sure we have plenty of private plaintiffs listening in here. Anything else that stood out to you when you were looking into this that you want to mention? And then maybe we can move onto some listener questions.
DR. HAL SINGER: Yeah, I think we can go to the listener questions. I think we’ve covered all the bases today in the piece.
TEDDY DOWNEY: Okay. Listener questions. First question. This person is interested in the anti-monopoly movements. So, not totally related to the paper, but what’s your take on where the anti-monopoly movement is now, Hal? And how does that relate to how you’re thinking about Airbnb?
DR. HAL SINGER: Well, I feel like it’s a very important part of, I think, our politics today. I would like to hope that it’s bipartisan. I think it could cut across partisan lines. When I look at the Trump administration, however, it doesn’t seem like they are as excited about pursuing these cases as they may have led on through political statements that they made, say, during the campaign.
But I don’t think that’s a fair characterization among their constituents. I think their constituents, whether Republican or Democrat, they do care about those sorts of things. And I do think that the anti-monopoly movement is a vibrant and well-defined approach for a party, if it wants to take it, to galvanize voters. I think it’s there for the taking. Just the anti-oligarchy movement in general is such a good lens to understand our problems in general. And I hope that it gets pursued vigorously.
TEDDY DOWNEY: Yeah, the other thing I would say is, and we touched on this earlier, but if you look at the anti-monopoly movement and what all these people who are in it are talking about, they’re coming up with a lot of creative ideas to solve pricing or problems associated with something that is very politically relevant that we’re talking about, which is affordability, right? This is something that has been sort of part of the discussion of the anti-monopoly movement for a long time. We’ve got a lot of creative people.
I noticed Mamdani has brought in a lot of people from the anti-monopoly movement to help him with some of these affordability questions. And so, if you’re looking for the intellectual vanguard on a very, I’d say, politically apt topic, I think the anti-monopoly movement is looking into those groups that have been a part of that, is a pretty savvy thing to do. You’re going to come up with creative ideas and solutions they’re pushing. And you even had President Trump bring Mamdani in and be nice to him, right?
So, I agree with you. I doubt that the federal enforcers are going to take any cues, but that’s at least a little confusing and points to your point that it could be bipartisan at some level.
DR. HAL SINGER: Yeah, and just to kind of steer it back to these problems that we’re facing—I didn’t say this in the piece, but I have said it before. So, I’ll say it again. I mean, there’s no reason why we have to pursue common pricing algorithms exclusively through the courts, right? That’s one way to do it, but that takes a lot of time.
It enriches defense lawyers and economists, economic experts. So, this is an argument against my own economic interests, but we could deal with these things three to five years at a time, or we could just ban them. And I feel like a simple rule that would ban common pricing algorithms would get at this much faster than you could get at it through individual cases that are brought through antitrust courts.
TEDDY DOWNEY: Yeah, there’s that law in California that just passed that you mentioned the word coercion. I think there’s going to be a lot of looking at there’s that new anticoercion law in California. That’s a new law. Still, the word coercion will need to be defined and there will need to be cases around that, but certainly would be a more direct way to go after this type of problem.
Next listener question. What role do mom and pop owners with one to two rental properties play in this market?
DR. HAL SINGER: Yeah, well, the mom and pops, if they’re turning over their pricing authority to a third-party, that’s problematic. It really doesn’t matter how big your footprint is. I mean, that’s the whole point of a price fixing conspiracy, is that you’re aggregating the selling power over a whole bunch of actors who would otherwise lack selling power, right? And so, the fact that a lot of these guys are participating in smart pricing—even involuntarily, they might feel like they have to get a high placement in search results—they’re participating in the scheme. So, I know that may sound cruel, but I think that’s just the hard facts, that they might be part of a price fixing conspiracy.
TEDDY DOWNEY: Yeah, I’m actually kind of curious about that. If they’re being duped into violating the antitrust laws—they don’t know that they’re doing it—is that like another unfair practice? These people are obviously unwittingly engaging in a pricing conspiracy, which lends itself to, if you’re going to bring a lawsuit, you would be going after big property owners, not mom and pops who have no idea that they are. They think they’re just doing the default effectively.
DR. HAL SINGER: Yeah, that’s interesting. I mean, I’ll talk about cases, like I’ve done a lot of price fixing cases. Unfortunately, a lot of them are ongoing. So, I want to steer clear of any of those. But consummated cases like Capacitors, when you have 15 odd defendants, they all knew exactly what was happening in that price-fixing conspiracy when they were sharing information and jointly setting prices. So, there was no doubt that each one of those sellers was complicit. But I hear what you’re saying, that if you’re a mom and pop, and if you were coerced or cajoled into using smart pricing, and you didn’t even want to, then it seems odd to be pursuing those people as defendants in cases. I hear what you’re saying.
TEDDY DOWNEY: I have a listener making this point, which I’m going to form into question. They say it’s okay to sue one party for a Section 1 violation. Toys R Us is an example. It happens in tying cases most frequently where the other party to the illegal agreement was coerced. What are your thoughts on that?
DR. HAL SINGER: Oh, that’s great. Yeah, so if the lawyers who are chiming in know that this case could be brought against just Airbnb. But I think, Teddy, you might have the best compromise, which was maybe the compromise is you name Airbnb and some of the largest property owners in its network. I don’t think they could ever claim they were unwitting victims if they were going along with this scheme and benefiting from it.
TEDDY DOWNEY: Yeah, my experience with this is when it’s really bad, there are in the marketing materials to your big customers—I don’t know if Airbnb has a big sales department that reaches out, a special sales department that deals with big property owners or what have you, convincing them to use the price discovery algorithm, the pricing algorithm. But that’s when we’ve seen some really incriminating stuff. I’m curious if there is even, I mean, Airbnb.
DR. HAL SINGER: Well, we know that private equity for the long-term rental markets have been going in and rolling up entire neighborhoods. So, it wouldn’t surprise me if they’re also doing it in this market as well for shortterm rentals. So, I wouldn’t be surprised at all if you had a single party that had rolled up a whole bunch of substitutes in a neighborhood and putting it into Airbnb.
TEDDY DOWNEY: We’ve got more listener questions. The next one is can Algos address mispricing, a price less than what the market would bear by providing sellers with info on shape of demand curve? I’ll be honest, I don’t understand that, but maybe you can translate that for us, Hal, and answer it potentially.
DR. HAL SINGER: I don’t know if I got it either, but it did make me think of one thing that I wanted to say. Maybe this doesn’t directly answer the question, but there’s a growing literature out there about algorithms being used by independent agents to arrive at the monopoly solution, even though they’re not using the same common pricing algorithm. That is, these algorithms can be trained up and can learn how to reach the monopoly outcome.
They’re just much better at it than humans at getting to the coordinated monopoly equilibrium. And so, the point I wanted to put out in the piece was that even if a home sharer decides not to use the common algorithm, but decides to use its own pricing algorithm, there’s still potential for problem for two reasons. One is that the common algorithm is setting a floor and that new floor has been raised and that now is going to be the price around which all the defections are made.
But number two, this literature, and Ted Tatos does a nice job summarizing it, is finding that even the independent algorithms can be trained to reach a jointly profit maximizing solution. So, just the whole thing is dangerous. And I freely admit, when I come up with my idea of banning common pricing algorithms, that doesn’t solve the entirety of the problem. It just solves an aspect of the problem if the independent algorithms are mimicking what a common pricing algorithm would do. And we have problems there as well that we have to deal with.
TEDDY DOWNEY: Yeah, there’s no easy solution in the age of algorithms. We’ve got another similar question here. As a practitioner, how would you go about disentangling effects from mispricing with true anti-competitive price increases? It seems possible that the algorithm has better information about the level and shape of the demand curve and could recommend prices closer to what the market can bear without the market power necessary to generate anti-competitive effects. This seems to cast doubt on the causal effect of adoption that increases price since price increases are not per se anti-competitive.
DR. HAL SINGER: I think I get it, yeah. So, the causal proof here would be challenging as it’s always challenging, right? What we really want to do is we want to find out what prices would have looked like absent the adoption of this common pricing algorithm.
And so, the first model that pops into my head is a before after model. Maybe there’s a time—I know that Airbnb introduced this in circa 2015. So, maybe you could go back and get data to see what prices looked like prior to the adoption. Maybe you could take advantage of the fact that the adoption of the common pricing algorithm has grown over time.
If you remember that case, In re: Hi-Tech Employee Antitrust Litigation, which concerned the employees at Silicon Valley firms, the economist in that case made use of the share of employers who were participants in the scheme, which was growing over time, and used that as his key independent variable in a prediction model. Difference in differences, of course, is another approach and is the gold standard. I don’t know if we could do it here. But that would be looking for opportunities where you have a control group that’s operating contemporaneously not subjected to the treatment with a discrete point in time in which this conduct kicks in or the treatment kicks in for the group that’s subjected to the treatment. It would be hard. I mean, it’s hard in every case. It’s never a skip through the tulips.
TEDDY DOWNEY: If you pass the motion to dismiss, you’re going to get a lot of discovery about why they’re doing this and how they set it up. And I’m sure they’ve done experiments as well.
DR. HAL SINGER: Oh, yeah. Of course. If they have internal A-B experiments, yeah, that would be something that we could do. Yeah, but you keep taking me to the internal discovery and the qualitative evidence, right? As you should. And as an economist, I keep getting more excited about the data. But you’re absolutely right. The qualitative evidence can serve as a really important pillar in a case, particularly if it corroborates the findings of the quantitative evidence as well.
TEDDY DOWNEY: Got our last question here, unless we get more. There is a lot of attention on common pricing algorithms for housing. Where do you see the problem of common pricing algorithms going next?
DR. HAL SINGER: Well, I mean, if I were a private equity guy and I was looking for opportunities to partake in mischief, I would try to implement these schemes in every aspect of our economy. I wouldn’t stop at housing. I would try to do it in every aspect in which people are making purchases and the sellers are atomistic.
I think that we know about the roll-up strategies of private equity in things like plumbers and anesthesiology firms. But it seems to me that if they can find marketplaces in which individual sellers are making decisions that could be corralled into some common pricing, I think that they’re going to do it. I just want to say that my biggest fear here is that these guys are outrunning the law, at least outrunning antitrust law, right? And the antitrust law is just so slow. Even when a case is brought, it’s so slow that I feel like this might not be the best tool to combat the situation that we’re up against. I feel like we need to be considering options outside of antitrust enforcement to police the use of common pricing algorithms.
TEDDY DOWNEY: I want to take a step back for a second. We are in an environment where obviously famously the President for his inauguration had Big Tech executives in the front row with their spouses in front of members of Congress and Senators who were not allowed to bring their spouses. We’ve had tremendous concerns about corruption, payments for pardons, payments for mergers to go through, just lots of examples of corruption, particularly when it relates to Big Tech, lots of questions around the rule of law with this administration, the Venezuela situation being the latest example of that, but there are no shortages of other examples. There are questions of drifting towards autocracy in the U.S. How important is it for states to take on concentrated economic and political power when you have this happening at the federal level?
DR. HAL SINGER: Yeah, it’s more important than ever now for the states to do it. I fear that this administration—and I don’t mean this as a slight to anybody who’s working in the agencies because they’re just subject to the whims of the administration. But I fear that we’re in a highly corrupt—I’ve even coined the term, I think, gangster antitrust period. We saw it during Trump one.
Trump two, I think, is arguably worse with the Hewlett Packard/Juniper merger shenanigans. I think that Alvaro Bedoya has a really nice take on what’s happening with the acquisition of Warner Brothers. It seems like the winning bidder is the person who can do the worst things to CNN to appease the President. That’s a form of gangster antitrust.
So, I feel like in these next few years, yeah, we are going to have to lean pretty heavily on the states to step up to fill the void. And hopefully, we’re going to make it through this mess with a democracy. We’ll see how we come out on the other side. But I do think that the burden is now on the states and private enforcers to keep us from slipping into autocracy.
TEDDY DOWNEY: We actually have one last question. So, as much as I would like to end on that note, we have one last question here. Where would you draw the line between prohibited algorithmic pricing and permissible decision support tools? And how confident are you that such a line could be enforced in practice?
DR. HAL SINGER: Yeah, the first line is easy. The first line is you can’t use a common pricing algorithm. We don’t want individuals turning over their pricing to a common agent, common pricing agent, okay? Just end it, right?
The second one is harder, because as Ted Tatos and others have found, is that even if each of us use a pricing algorithm individually, the algorithms can learn each other and speak to each other and effectively feel their way to monopoly outcomes.
So, there’s a problem there, right? And I don’t know if I’m prepared to give a legislative fix. I mean, if you asked me, could I live with just banning these things entirely? I probably could. But I could see someone making the case that when used individually, there could be some benefits, right?
And so, I think that the only thing that I’m comfortable saying right now is if we’re looking at legislative fixes, I’d like to see a ban on the use of common pricing algorithms. I feel like that’s a no-brainer.
TEDDY DOWNEY: I mean, what is the point of a decision support tool, right? Like, if this is a competitive market, how can you help it be more competitive on quality? Guess what? Give them tips on how to improve the room. Give them tips on how to improve their customer service. Make all of that easier. Make it easier to make a good experience and make it a premium product. Have incentives to make the product better. This idea that you’re going to have decision support tools, it sounds like more and more ways to get the price up without making it better, right?
DR. HAL SINGER: Well, I mean, here’s the problem in a nutshell. Remember, there’s this Israeli outfit that sold the algorithmic pricing to Delta, right? And that’s bad enough, right? But, of course, that Israeli outfit is not just going to stop with Delta. I mean, how are they going to make money? They’re going to make money by selling their pricing algorithm to Delta’s competitors.
So, it seems like we’re never going to get to this imagined hypothetical state of the world in which each airline is using its own independent pricing algorithm, right? How can we ensure that would ever happen, right? Most likely the case is that this outfit—I wish I could remember the name—once they prove that Delta – you know, Delta’s CEO was bragging that it increased the revenues per passenger after the first quarter of adoption, even at something like five percent. Of course, this outfit is going to go sell it to others. And we’re going to be back into the situation that I’m most concerned about, which is everybody using the same pricing algorithm, right?
TEDDY DOWNEY: Yeah, I mean, there was a time when these companies competed on the merits. How do we have laws to make them compete on the merits? Seems like pretty reasonable plan to me.
DR. HAL SINGER: That’s where we want them to be.
TEDDY DOWNEY: But I suppose if you really believe in decision tools and pricing power or whatnot, you might disagree with that. But Hal, a pleasure as always. Thank you so much for doing this. I look forward to doing it again. Maybe—I don’t know what your plans are, but we have an event that we are planning in LA about Hollywood and antitrust in March. I don’t know if that is of interest to you, but maybe we can talk about that at some point.
DR. HAL SINGER: I’m not teaching this semester. So, it’s a little easier for me to move around. And I’ve got a piece on the Netflix acquisition. So, if you haven’t seen that yet.
TEDDY DOWNEY: I’d love to hear that. I look forward to reading that. I look forward to having another conversation, maybe seeing you out in LA. Same goes for our listeners. Thank you to everyone for joining us and bye-bye. See you.
DR. HAL SINGER: All right. Thanks so much. Bye-bye.
TEDDY DOWNEY: Thank you.
