This happens to any platform using algorithmic pricing. Any time there is an unexpected event that either constrains supply or increases demand (or both), the algos go haywire. Then the the platform has to put in checks to prevent it from happening again.
Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.
The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
> The hard question is how do you find the balance?
That's an easy question - you find the balance by letting people do what they want, then it automatically balances.
Banning that, you can't find the balance because you've banned the mechanism that balances.
That's the economists answer, but not the human answer. In the case of an emergency, especially one involving the sudden loss of housing in one area, economics doesn't cover the answer. If we simply "let the market do it's thing", you'd end up with only the richest people getting housing, even though they are the ones that can afford to leave the area, while leaving even the middle class and poor completely homeless.
The real answer here is to figure out a way for the people who need it most to get it, and the people who need it most aren't always the richest.
I'm not dehumanizing economists, I'm dehumanizing the particular theory I was replying to, which is "let the market do its thing". Which is a very rational and uncaring way to look at things.
And I'm aware I didn't provide an answer. I specifically said there is no answer.
You provided a partial answer.. the general idea to work out how need vs ability to pay can be reliably signalled. Don't give up! Or at least keep the idea around, until something shoes up. The general theory of auctions provides other sorts of partial answers, and it doesn't look like there are any mathematical or physical laws that forbid the kind of answer some of us would like to see. I reckon I'm not dehumanizing anybody here :) this is more interesting than imo problems, you might not even want to ask LLMs because that'd make it boring-er. Uber and Airbnb would have peeps on this if they do care*!
Edit: the same basic problem appears everywhere, e.g.
-*the need to make money exceeds the ability to solve general problems
-your need to understand exceeds my ability to explain
-my ability to focus exceeds your need to continue this thread
-healthcare insurance ie try to get tptacek on your side
But you're the only one doing dehumanization! The theory is "let people freely do their thing", why do you speak like an economist and replace humans with markets? Where does the lack of care appear?
That's capitalism in general, the moneyd get the cream of all crops while the rest of us fight for the scraps. The only respected virtue is unadulterated greed.
It's a hard question because we don't live in Anarcho-Libertarian society, and we have laws.
The issue isn't "what should we do here," which is a political question, for whom each person will have their own answer. The question is what do you do about a "we're just a venue, we're not actually conducting business" company that is very clearly facilitating mass-violation of laws.
This undermines rule of law, simply because our legal system isn't designed for centralized vehicles for criminal behavior, without being able to charge the catalyst for the behavior, the app, with penalty such that it compels behavior going forward. Facilitating these crimes is criminal behavior.
It's a tough question, both politically, and practically. We like the idea of AirBnB, but if we can't find a way to create an enforcement mechanism for local hotel rules, then we're basically endorsing lawlessness... which isn't politically sustainable.
Extorting an emergency and telling someone they either pay upwards of their entire life savings or die is not acceptable. There cannot be a free market in short term, life-changing moments there's no time or deliberation or competition that capitalism requires to find "balance".
Making stuff up for dramatic effect is also not an acceptable argument.
> there's no time or deliberation or competition that capitalism requires to find "balance".
That's not a requirement, but also there is time and all that- otherwise how did the people manage to use airbnb in the first place if they had no time? And you can deliberate for 5 minutes looking at a very high price and decide that you can temporarily stay in a much smaller place and further away than you wanted/used to. Or maybe move to your friends /relatives instead
The argument is there should be no balance, I am absolutely allowed to use worst-case. There is a reason it is illegal to price gouge water in emergency situations.
No, there is a balance, you've made up an argument
> I am absolutely allowed to use worst-case.
And I'm allowed to call out this faulty rhetoric
> That law, like many, is written in blood
That law, like many, is causing blood. It was the same thing with masks - instead of incentivizing people to drive far away to get masks from places of low demand and move them back to the city with high deficit, the FBI cracked down on gouging grounds, leaving people in cities exposed to the deadly virus without a mask.
> No, there is a balance, you've made up an argument
Don't fucking gaslight me like I'm illiterate and can't look up three damn messages. You literally said that there should be no controls, ergo no balance between free market capitalism and controlled emergency economy.
Talking with people like you is such a waste of time.
The sellers are definitely price-sensitive though. The choice isn't between a $350 trip and a $20 one (because demand far outstrips supply at the point), it's $350 or no deal, or at best a lottery ticket to see if you're one of the lucky 5% of people who can get a ride at the old price.
When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
> The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
> The hard question is how do you find the balance?
Why is that a hard question? What balance are you looking to find?
Allowing those who are willing to pay any price to do so while still serving the community by not price gouging everyone, especially those who are price sensitive but are still desperate.
When the supply of something is lower than the number of people that are price sensitive and desperate, capping prices will still leave desperate people without what they want. Many mechanisms that appear to be more fair, like free lotteries, end up distorting things in other ways: If it's a free lottery, you bet people will sign up without being desperate.
One might have an aesthetically favorite version of deciding who is going to go without, but there's always going to be a problem with just that. What really helps is increasing the supply of what people want. And for that, it's hard to beat increasing rewards to the suppliers.
Don't high price signals in an efficient market serve the community by increasing supply? It's hard to argue that there's a better way to do it that doesn't inadvertently decrease the supply and instead become a lottery
I think this would rely on an assumption that there is always supply available to draw on.
At some point there is no supply to alleviate the problem. Some effects may be dampened by new ride share drivers signing up, but even then, not everyone wants to be a driver regardless of compensation.
I don’t know of a good approach to free-market around a supply limitation in the short-term.
Prices cannot solve all supply problems. We cannot have 2 million teenagers dating the starlet-du-jour. But prices typically can increase the supply quite a bit, while most techniques that avoid prices will not increase supply at all.
So if the goal is to maximize how many people get what they want, prices, plus some mechanism to avoid temporal speculation (for instance someone saving their sealed pokemon cards for 20 years hoping for price increases) makes the most sense.
That's unlikely for sudden and short-lived surges, isn't it? There probably won't be plenty of new rentals popping up in LA because of potentially high demand during the next wildfire.
That is an incoherent, meaningless sentence. You think people should be allowed to pay high prices, but no one should be allowed to accept their money? What do you think it means to be allowed to pay for something?
So correct me if I’m wrong but Airbnb does not recommend a price. Theres no “algorithm”
Nor do they review prices. You could post a place for $1million a night and they won’t notice or care. It just won’t get rented.
> The hard question is how do you find the balance?
If only there were an entire field of study dedicated to matching supply and demand to maximize utility while encouraging efficient resource allocation...
It happens all the time, actually. It's what happened to Gamestop. A few people really wanted the stock and the price just shot up. The worst was the Reddit IPO. The price just kept going up and the Reddit team sold stock at high prices instead of serving the community. It's just greed.
People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.
Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.
Highly dependent upon circumstances, the government should really only regulate prices on a few things and that’s it (ie essential needs such as healthcare and energy, which is the case where I’m from).
Having government mandated prices for everything is a very silly approach.
With the current state of the internet and the absolute nonsense I’ve seen people write online I didn’t catch that, so I apologize for not catching that.
Another essential need is video games and Internet, without which most people cannot survive. Today's people also need access to the AI companion Ani part of the Grok 4 character suite built by x.ai. But we can solve the latter problem by just providing everyone with a $100k/year budget to spend on companionship. Mental health is health. Other platitudes available on demand. If you like, I can also use LLM to say such platitudes in the drawn out style of OP comment so that everyone can gather around and participate in game of Woe The Capitalist. Great enjoyment.
The article doesn't make it clear whether it was AirBNB itself that increased prices, or whether it was hosts. And moreover, it also doesn't even give one example of a before and after price. I'd like to see at least one example.
Host here. Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.
Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
> Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
So then real price gouging is... what, when you charge more than everyone else (and drive all your customers away to competitors)?
> then real price gouging is... what, when you charge more than everyone else
Honestly, a myth. It’s aesthetically pleasing (outside perishable personal essentials, like staples in a crisis). But if you have less housing than the population, the problem is the lack of housing. Getting uppity about pricing while builders wait months to get permits issued is performative at best.
Gouging: When I have a significant control of the supply, and set prices up in a way that significant parts of the supply get wasted because my profits are maximized anyway.
So one can argue that some cartel-like algorithms are price gouging, but it's unlikely to be what a provider of a lone AirBnb unit will do, as for them, going empty is worth zero.
Yeah, funny how property markets always seem to have that same response.
I bet most of those same people would lose their minds if their favourite restaurant tried to double prices overnight. "Yeah we sold a lot of burgers yesterday..."
popularity is irrelevant - the context is day-to-day. Prices change slowly over time of course, but that's different.
If there was less egg available for a given day, McDonald's [^1] don't charge more for a McMuffin, they sell fewer McMuffins
I'd argue AirBnb's approach here is more like Uber's surge rates. Which are clearly more extreme than anything taxi cabs did (bar the occasional bad actor)
[^1]: mcdonalds is stretching the "restaurant" analogy here, but they have a higher consistent turnover so seem like a closer comparison
I wonder how much "value" would actually be lost from the market if prices were simply fixed a month or two ahead of time to exclude those price shocks.
Is the price reflective of the market though? I just negotiated an airbnb outside of airbnb at 40% of the platform quoted price and it was not a deal either but the market price. Airbnb massively inflates prices for everyone to create an expectation of how much things cost.
> Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.
This seems pretty undesirable. Very easy for Airbnb/third party to increase prices even without demand just to increase their prices.
We recently saw a similar price fixing lawsuit for renters. Landlords, co-ordinating together, ended up increasing prices of Condos across major American cities (via means of a third party). The consumer ends up paying unnecessarily high prices in an inelastic market.
What definition of gouging are you using that conflicts with “there's just a demand surge and a supply crunch”?
“the market responds the same way as if it was a business conference in town.” Normal people definitely complain about that and use the word gouging when they do so.
Huh. I know a number of AirBNB hosts (the new kind that treat it like a business, not the old kind) and they all absolutely do model the market out months in advance and 100% manually set the prices.
This reminds me of the time my middle-school history teacher decided to bring in one of the student’s financial advisor parents to defend price-gouging on gas during Hurricane Katrina evacuation and subsequent exodus.
It was an unconvincing argument then, and is an unconvincing argument now.
That’s awfully hard to do well though, especially setting up a system quickly.
Sure, you can limit amount per customer per store. But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…
All the toilet paper is still gone, encouraging fear in other people to do the same as the couple above.
The alternative would have been “you idiots are buying all the toilet paper? Fine. It’s 5x more expensive now.”
People then see that toilet paper is still in stores and prices can come down gradually but rapidly, and if people start being nervous again prices can quickly raise to stamp that out.
> But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…
During a panic toilet paper shooping spree that would allow like 100 other customers to also get toilet paper.
if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.
if airbnb raised the prices and the market stayed strong, they'd raise the prices more.
the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.
the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.
let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.
if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
(while I think this isn't the affordability driver) this point about prices isn't really true - compare the graphs of two markets: one with a horizontal demand curve (perfect competition) and one with a downward-sloping demand curve (monopoly) - the first will have no deadweight loss, the second will have substantial deadweight loss.
Markets tend to the second and need state intervention in order to prevent the proliferation of monopolies. Functionally this is intervention every time price coordination happens, which... is pretty clearly what AirBNB is doing!
This is all economy 101, rational preference BS. The reality is that suppliers very often collude to increase prices universally (particularly for things like housing, where there is almsot a natural monopoly - you can't bring in more land to the same city), and buyers have no way of knowing or acting on this. Airbnb is perfect for organizing such collusion, acting as a virtual cartel.
econ 101 actually explains collusion as you are describing, but you need evidence to show perfect collusion of all participants to make the point you are trying to make. the average person in LA probably knows friends who rent out spaces and would tell you that their friends are not part of a cartel
but the real estate shortage and natural monopoly you allege (it's not true as I already pointed out) would explain the post fire short term situation, so you don't need to grasp for conspiracy theories.
as i said already, airbnb's potential to manipulate RE prices is a problem to be concerned about in normal times. When a fire burns down much of the city, prices go up because there is an actual shortage, not price manipulation.
Is anyone tracking these platforms? Today coincidentally I got a Lyft from the airport to home and due to traffic it would take 1 hour, the price asked was $125. Ok steep, but the poor driver would be stuck with me for an hour.
BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.
Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.
If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Isn’t the underlying assumption here that supply is essentially infinite (or at least comparable to demand)? I think is the underlying assumption with any such statement. If the assumption doesn’t hold true then I am not sure the statement holds true (perhaps only till there is some supply).
Well that assumes that there are more suppliers available (within the time period under consideration). Over what time period do we assume that more suppliers will be drawn out? An hour? A day? A month?
Given that hosts routinely take their units off market for various reasons, people who have been on the edge of renting out via Airbnb, etc. I'd say the supply increase can be quite substantial. I don't have the data. Only Airbnb does.
> If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.
You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
> You know what would actually guarantee an increase in supply? Government-funded public housing
Or just removing needless restrictions so the market can provide the incentive for private entities to build housing? The government is not the primary builder of housing, nor should it be.
Up here in North Idaho...my landlord that I was leaving told me how much more expensive things are going to be since the fires in California...everyone wanting to move here.
I already found another house cheaper/better.
The supply of housing is more elastic than you think. Some people have spare bedrooms, or second homes in LA. They may have previously chosen to leave them vacant, but for many people the higher rates they can get on Airbnb can entice them to list them. This happens at the margins—it’s not an all or nothing thing. So the higher people can earn renting out available space, the more they’ll be willing to rent. At some price point, even a billionaire will rent out their garage.
So? Let the free market define the correct price. It’s not like there’s thousands of alternatives to their platform that are better for both renter and landlord, and by regulating them into controlled prices all you’re doing is cementing their monopoly position. Haven’t we learned this lesson yet?
How is it any different than "congestion pricing"? Last time I experienced such, was on my way from the airport to the city. Unfortunately someone had jumped on the tracks, and the trains were locked down for 3 hours while the police etc. came to investigate the scene. During peak hours. Lines to the taxi and bus must have been 200 meters long and 5 meters wide. Checked out Uber, got something like $250 for a 30 min drive.
Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
Shooting the messenger is always what is done when the facts on the ground can no longer be ignored, but acknowledging them would threaten the comfort of denial.
"Shooting the messenger" (to quote you) is what happens when the messenger is an incompetent idiot, who fails miserably at their job and takes down the entire UN with them. Being a corrupt terrorist sympathizer who is funded by Hamas doesn't help said messenger either.
Just pointing out a fact about AirBnB with source seems to be futile. Interesting, I would love to see the up/down votes and how they progress over time.
This is an absurd diversion from how poorly LA leadership is performing.
Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave.
LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds.
In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy.
Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway?
Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
"...sources with knowledge of the incident have told news outlets that it appears to have been intentionally set and that the storage of wood pallets and hand sanitizer under the overpass contributed to the intensity of the blaze. Both wood pallets and hand sanitizer are known to fuel fires."
Why was there bulk pallets and hand sanitizer? It's basically kindling, with a napalm icing. Look at the photo. It is likely this product was stored there due to it was removed from somewhere else where it was illegally stored. And it was likely to be a business operating illegally, without the proper licenses and permits. Or they needed to dispose of the product and simply did not want to pay for it.
Governor Newsom has already acknowledged this was and is a failure of governance.
It might seem logical to connect the number of fires and the fire department budget, after all, it's right there in the name! But in reality, most fire departments spend almost none of their time putting out fires. It's mostly first-responder/EMT work.
This happens to any platform using algorithmic pricing. Any time there is an unexpected event that either constrains supply or increases demand (or both), the algos go haywire. Then the the platform has to put in checks to prevent it from happening again.
Remember when Uber was new and the surge pricing could do 20X+ in just a few minutes when there was an emergency? And then they had to fix it so that wouldn't happen, the trade off being that there just weren't cars available.
The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
The hard question is how do you find the balance?
> The hard question is how do you find the balance?
That's an easy question - you find the balance by letting people do what they want, then it automatically balances. Banning that, you can't find the balance because you've banned the mechanism that balances.
That's the economists answer, but not the human answer. In the case of an emergency, especially one involving the sudden loss of housing in one area, economics doesn't cover the answer. If we simply "let the market do it's thing", you'd end up with only the richest people getting housing, even though they are the ones that can afford to leave the area, while leaving even the middle class and poor completely homeless.
The real answer here is to figure out a way for the people who need it most to get it, and the people who need it most aren't always the richest.
Besides dehumanizing economists, your "real answer" doesn't provide an answer, though that's also human...
I'm not dehumanizing economists, I'm dehumanizing the particular theory I was replying to, which is "let the market do its thing". Which is a very rational and uncaring way to look at things.
And I'm aware I didn't provide an answer. I specifically said there is no answer.
You provided a partial answer.. the general idea to work out how need vs ability to pay can be reliably signalled. Don't give up! Or at least keep the idea around, until something shoes up. The general theory of auctions provides other sorts of partial answers, and it doesn't look like there are any mathematical or physical laws that forbid the kind of answer some of us would like to see. I reckon I'm not dehumanizing anybody here :) this is more interesting than imo problems, you might not even want to ask LLMs because that'd make it boring-er. Uber and Airbnb would have peeps on this if they do care*!
Edit: the same basic problem appears everywhere, e.g.
-*the need to make money exceeds the ability to solve general problems
-your need to understand exceeds my ability to explain
-my ability to focus exceeds your need to continue this thread
-healthcare insurance ie try to get tptacek on your side
But you're the only one doing dehumanization! The theory is "let people freely do their thing", why do you speak like an economist and replace humans with markets? Where does the lack of care appear?
That's capitalism in general, the moneyd get the cream of all crops while the rest of us fight for the scraps. The only respected virtue is unadulterated greed.
It's a hard question because we don't live in Anarcho-Libertarian society, and we have laws.
The issue isn't "what should we do here," which is a political question, for whom each person will have their own answer. The question is what do you do about a "we're just a venue, we're not actually conducting business" company that is very clearly facilitating mass-violation of laws.
This undermines rule of law, simply because our legal system isn't designed for centralized vehicles for criminal behavior, without being able to charge the catalyst for the behavior, the app, with penalty such that it compels behavior going forward. Facilitating these crimes is criminal behavior.
It's a tough question, both politically, and practically. We like the idea of AirBnB, but if we can't find a way to create an enforcement mechanism for local hotel rules, then we're basically endorsing lawlessness... which isn't politically sustainable.
It's a tough situation mostly because you've decided to reject reality.
Let people sort it out, they know what's going to work best for them far better than you.
Again, what you think should happen is just more politics.
Extorting an emergency and telling someone they either pay upwards of their entire life savings or die is not acceptable. There cannot be a free market in short term, life-changing moments there's no time or deliberation or competition that capitalism requires to find "balance".
> entire life savings or die is not acceptable
Making stuff up for dramatic effect is also not an acceptable argument.
> there's no time or deliberation or competition that capitalism requires to find "balance".
That's not a requirement, but also there is time and all that- otherwise how did the people manage to use airbnb in the first place if they had no time? And you can deliberate for 5 minutes looking at a very high price and decide that you can temporarily stay in a much smaller place and further away than you wanted/used to. Or maybe move to your friends /relatives instead
The argument is there should be no balance, I am absolutely allowed to use worst-case. There is a reason it is illegal to price gouge water in emergency situations.
That law, like many, is written in blood.
> The argument is there should be no balance.
No, there is a balance, you've made up an argument
> I am absolutely allowed to use worst-case.
And I'm allowed to call out this faulty rhetoric
> That law, like many, is written in blood
That law, like many, is causing blood. It was the same thing with masks - instead of incentivizing people to drive far away to get masks from places of low demand and move them back to the city with high deficit, the FBI cracked down on gouging grounds, leaving people in cities exposed to the deadly virus without a mask.
> No, there is a balance, you've made up an argument
Don't fucking gaslight me like I'm illiterate and can't look up three damn messages. You literally said that there should be no controls, ergo no balance between free market capitalism and controlled emergency economy.
Talking with people like you is such a waste of time.
The sellers are definitely price-sensitive though. The choice isn't between a $350 trip and a $20 one (because demand far outstrips supply at the point), it's $350 or no deal, or at best a lottery ticket to see if you're one of the lucky 5% of people who can get a ride at the old price.
When the rate shoots up like this drivers will get a message, and plenty of them will get out of bed or stop whatever they're doing and get on the road. The platform will probably take a nice cut, but otherwise to meet demand they'd have to subsidise most of the difference. That would be some very expensive PR.
> The thing is, some people aren't price sensitive. In a sudden blizzard, some people are happy to pay $350 for a two mile ride home, just to get home. And some drivers are happy to go out in that weather for their piece of the $350.
> The hard question is how do you find the balance?
Why is that a hard question? What balance are you looking to find?
Allowing those who are willing to pay any price to do so while still serving the community by not price gouging everyone, especially those who are price sensitive but are still desperate.
When the supply of something is lower than the number of people that are price sensitive and desperate, capping prices will still leave desperate people without what they want. Many mechanisms that appear to be more fair, like free lotteries, end up distorting things in other ways: If it's a free lottery, you bet people will sign up without being desperate.
One might have an aesthetically favorite version of deciding who is going to go without, but there's always going to be a problem with just that. What really helps is increasing the supply of what people want. And for that, it's hard to beat increasing rewards to the suppliers.
Don't high price signals in an efficient market serve the community by increasing supply? It's hard to argue that there's a better way to do it that doesn't inadvertently decrease the supply and instead become a lottery
I think this would rely on an assumption that there is always supply available to draw on.
At some point there is no supply to alleviate the problem. Some effects may be dampened by new ride share drivers signing up, but even then, not everyone wants to be a driver regardless of compensation.
I don’t know of a good approach to free-market around a supply limitation in the short-term.
Prices cannot solve all supply problems. We cannot have 2 million teenagers dating the starlet-du-jour. But prices typically can increase the supply quite a bit, while most techniques that avoid prices will not increase supply at all.
So if the goal is to maximize how many people get what they want, prices, plus some mechanism to avoid temporal speculation (for instance someone saving their sealed pokemon cards for 20 years hoping for price increases) makes the most sense.
That's unlikely for sudden and short-lived surges, isn't it? There probably won't be plenty of new rentals popping up in LA because of potentially high demand during the next wildfire.
People can drive from other locations without setting up a rental
That is an incoherent, meaningless sentence. You think people should be allowed to pay high prices, but no one should be allowed to accept their money? What do you think it means to be allowed to pay for something?
Why would you cater to those willing to pay any price? They’re a tiny minority of people.
So correct me if I’m wrong but Airbnb does not recommend a price. Theres no “algorithm” Nor do they review prices. You could post a place for $1million a night and they won’t notice or care. It just won’t get rented.
They recommend a price when you list, and they de-emphasize your property in listings if you don't fall within the recommendation.
> The hard question is how do you find the balance?
If only there were an entire field of study dedicated to matching supply and demand to maximize utility while encouraging efficient resource allocation...
It happens all the time, actually. It's what happened to Gamestop. A few people really wanted the stock and the price just shot up. The worst was the Reddit IPO. The price just kept going up and the Reddit team sold stock at high prices instead of serving the community. It's just greed.
People should not be allowed to sell except at the government-mandated price. Of course, a few million may starve, but that is a sacrifice I am willing to make in order to serve the community.
Hopefully, we can make this Great Leap Forward in consumer rights, and prevent Late Stage Capitalism from having a Mask-Off Moment in AI slop enshittification. If you disagree, I'm begging you to read a book. Tell me you're enabling corporate interests to cause trauma without telling me you're enabling corporate interests to cause trauma.
Highly dependent upon circumstances, the government should really only regulate prices on a few things and that’s it (ie essential needs such as healthcare and energy, which is the case where I’m from).
Having government mandated prices for everything is a very silly approach.
The post you're replying to was being sarcastic.
With the current state of the internet and the absolute nonsense I’ve seen people write online I didn’t catch that, so I apologize for not catching that.
I think your earnest response was actually a good way to engage.
Another essential need is video games and Internet, without which most people cannot survive. Today's people also need access to the AI companion Ani part of the Grok 4 character suite built by x.ai. But we can solve the latter problem by just providing everyone with a $100k/year budget to spend on companionship. Mental health is health. Other platitudes available on demand. If you like, I can also use LLM to say such platitudes in the drawn out style of OP comment so that everyone can gather around and participate in game of Woe The Capitalist. Great enjoyment.
The article doesn't make it clear whether it was AirBNB itself that increased prices, or whether it was hosts. And moreover, it also doesn't even give one example of a before and after price. I'd like to see at least one example.
Host here. Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.
Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
Another thing worth pointing out is that the market of available Airbnbs clears out from the cheaper units first. So it may look like prices are shooting up, but really it's just that all the normal priced ones are gone.
> Which is an argument that this is not truly gouging - there's just a demand surge and a supply crunch and the market responds the same way as if it was a business conference in town.
So then real price gouging is... what, when you charge more than everyone else (and drive all your customers away to competitors)?
> then real price gouging is... what, when you charge more than everyone else
Honestly, a myth. It’s aesthetically pleasing (outside perishable personal essentials, like staples in a crisis). But if you have less housing than the population, the problem is the lack of housing. Getting uppity about pricing while builders wait months to get permits issued is performative at best.
Gouging: When I have a significant control of the supply, and set prices up in a way that significant parts of the supply get wasted because my profits are maximized anyway.
So one can argue that some cartel-like algorithms are price gouging, but it's unlikely to be what a provider of a lone AirBnb unit will do, as for them, going empty is worth zero.
Sounds less like price gouging and more like price fixing.
Yeah, funny how property markets always seem to have that same response.
I bet most of those same people would lose their minds if their favourite restaurant tried to double prices overnight. "Yeah we sold a lot of burgers yesterday..."
If a restaurant is so popular that they're often running out of food, it's perfectly reasonable for them to raise their prices.
popularity is irrelevant - the context is day-to-day. Prices change slowly over time of course, but that's different.
If there was less egg available for a given day, McDonald's [^1] don't charge more for a McMuffin, they sell fewer McMuffins
I'd argue AirBnb's approach here is more like Uber's surge rates. Which are clearly more extreme than anything taxi cabs did (bar the occasional bad actor)
[^1]: mcdonalds is stretching the "restaurant" analogy here, but they have a higher consistent turnover so seem like a closer comparison
Not during a famine
I’d argue that’s a better time to do it? People will eat less, conserving food.
That’s actually what happened around here, during inflation.
Restaurants are now double what they were, just a couple of years ago; even the cheaper ones.
The prices shot up, and have yet to back down.
I wonder how much "value" would actually be lost from the market if prices were simply fixed a month or two ahead of time to exclude those price shocks.
Is the price reflective of the market though? I just negotiated an airbnb outside of airbnb at 40% of the platform quoted price and it was not a deal either but the market price. Airbnb massively inflates prices for everyone to create an expectation of how much things cost.
> Almost nobody sets prices manually. You either use Airbnb's pricing algorithm, or one from a third party. Either way it's set automatically based on local occupancy rates/hotel prices/etc.
This seems pretty undesirable. Very easy for Airbnb/third party to increase prices even without demand just to increase their prices.
We recently saw a similar price fixing lawsuit for renters. Landlords, co-ordinating together, ended up increasing prices of Condos across major American cities (via means of a third party). The consumer ends up paying unnecessarily high prices in an inelastic market.
What definition of gouging are you using that conflicts with “there's just a demand surge and a supply crunch”?
“the market responds the same way as if it was a business conference in town.” Normal people definitely complain about that and use the word gouging when they do so.
>Almost nobody sets prices manually.
Huh. I know a number of AirBNB hosts (the new kind that treat it like a business, not the old kind) and they all absolutely do model the market out months in advance and 100% manually set the prices.
Uh, you are describing gouging, you've just handed it off to an algorithm so you can pretend it's not exactly what it is.
This reminds me of the time my middle-school history teacher decided to bring in one of the student’s financial advisor parents to defend price-gouging on gas during Hurricane Katrina evacuation and subsequent exodus.
It was an unconvincing argument then, and is an unconvincing argument now.
FWIW this is the most convincing argument I've seen for allowing prices to raise during an emergency: https://www.econlib.org/library/Columns/y2007/Mungergouging....
Second most convincing argument is people who hoarded toilet paper during COVID
>Second most convincing argument is people who hoarded toilet paper during COVID
That's not an argument for price gouging, it's an argument for rationing.
That’s awfully hard to do well though, especially setting up a system quickly.
Sure, you can limit amount per customer per store. But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…
All the toilet paper is still gone, encouraging fear in other people to do the same as the couple above.
The alternative would have been “you idiots are buying all the toilet paper? Fine. It’s 5x more expensive now.”
People then see that toilet paper is still in stores and prices can come down gradually but rapidly, and if people start being nervous again prices can quickly raise to stamp that out.
> But then someone comes in with their husband and double dips, and then go back through in 10 minutes hitting different checkouts, or just go through self checkout, and then go to different stores…
During a panic toilet paper shooping spree that would allow like 100 other customers to also get toilet paper.
Is this a viable workaround… Charge $XX entry/membership fee for the opportunity to buy ice at the regular price?
>The article doesn't make it clear
we don't need to know.
if airbnb raised the prices and the market isn't there, rental income will go down and vacancy rates will go up and airbnb will lower prices again.
if airbnb raised the prices and the market stayed strong, they'd raise the prices more.
the higher the prices go, the more people with extra space to rent out will take notice and clean up their garage, or go stay at grandma's or whatever, creating more housing out of thin air (actually, on the margin) helping alleviate the housing shortage.
the same pattern would happen if hosts raise the prices themselves. also, if all the cheap places get rented, the market will appear to have higher prices even if nothing has changed.
let markets figure out prices, period. that's what markets do, it's one of mankind's stellar achievments. It's why the west is successful and communism fails.
if airbnb has monopoly power and is manipulating prices, fix that problem any day of the week, don't use a massive fire that destroys housing as evidence of anything, it means nothing, that's normal market correction.
(while I think this isn't the affordability driver) this point about prices isn't really true - compare the graphs of two markets: one with a horizontal demand curve (perfect competition) and one with a downward-sloping demand curve (monopoly) - the first will have no deadweight loss, the second will have substantial deadweight loss.
Markets tend to the second and need state intervention in order to prevent the proliferation of monopolies. Functionally this is intervention every time price coordination happens, which... is pretty clearly what AirBNB is doing!
there is no reason to think LA real estate matches those special cases you've contructed
This is all economy 101, rational preference BS. The reality is that suppliers very often collude to increase prices universally (particularly for things like housing, where there is almsot a natural monopoly - you can't bring in more land to the same city), and buyers have no way of knowing or acting on this. Airbnb is perfect for organizing such collusion, acting as a virtual cartel.
econ 101 actually explains collusion as you are describing, but you need evidence to show perfect collusion of all participants to make the point you are trying to make. the average person in LA probably knows friends who rent out spaces and would tell you that their friends are not part of a cartel
but the real estate shortage and natural monopoly you allege (it's not true as I already pointed out) would explain the post fire short term situation, so you don't need to grasp for conspiracy theories.
as i said already, airbnb's potential to manipulate RE prices is a problem to be concerned about in normal times. When a fire burns down much of the city, prices go up because there is an actual shortage, not price manipulation.
time for you to hit the books again.
Is anyone tracking these platforms? Today coincidentally I got a Lyft from the airport to home and due to traffic it would take 1 hour, the price asked was $125. Ok steep, but the poor driver would be stuck with me for an hour.
BUT NO! I asked the driver and at the end of the trip he kindly showed me how much Lyft gave him.
$62 before tip.
That looks suspiciously close to 50%. Does anyone know what's the usual cut of these platforms?
I would like to know that too. I would have never thought it was 50%
I would love to see some innovation in this space like India's ONDC and more Direct-to-Driver apps.
https://nammayatri.in/open?cc=
Is it Airbnb that increased the price or hosts?
Regardless, I don't see any problem here. The price increases, more people with a spare apartment, home, or room will be incentivized to host which increases supply.
If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Isn’t the underlying assumption here that supply is essentially infinite (or at least comparable to demand)? I think is the underlying assumption with any such statement. If the assumption doesn’t hold true then I am not sure the statement holds true (perhaps only till there is some supply).
No, that's not the assumption. The assumption is that higher prices will draw out more supplies. This is how a free market works.
Well that assumes that there are more suppliers available (within the time period under consideration). Over what time period do we assume that more suppliers will be drawn out? An hour? A day? A month?
Given that hosts routinely take their units off market for various reasons, people who have been on the edge of renting out via Airbnb, etc. I'd say the supply increase can be quite substantial. I don't have the data. Only Airbnb does.
> If you suppress the price artificially, then the supply won't increase which won't do people who lost their homes any favors.
Supply's not increasing substantially in the near future to help regardless. Folks place far too much faith in market effects that history has demonstrated again and again only take effect in the long term.
You know what would actually guarantee an increase in supply? Government-funded public housing. But that would deflate property prices, which is far more reprehensible to americans than the institutions of poverty and homelessness. We are a disgusting and reprehensible people.
> You know what would actually guarantee an increase in supply? Government-funded public housing
Or just removing needless restrictions so the market can provide the incentive for private entities to build housing? The government is not the primary builder of housing, nor should it be.
I simply do not share your faith, and I think any government that does not build housing for its people hates its people.
Seems like basic supply and demand rather than something nefarious?
But I guess if we accepted that, nobody would be to blame.
https://www.caloes.ca.gov/office-of-the-director/policy-admi...
Thank you. This thread is full of people acting as though price gouging during emergencies hasn't been illegal since before the Internet.
Not a California thing either. Southern states have similar laws thanks to common natural disasters like hurricanes.
Basic supply and demand is nefarious when it comes to survival.
The fires burned in some of the wealthiest parts of the US. Dumping a ton of multimillionaires on the short term rental market will raise prices yes.
Airbnb claims it charges about 16% fee on top of the actual rental price. https://www.airbnb.com/resources/hosting-homes/a/how-much-do...
Which is fair for what they do.
Up here in North Idaho...my landlord that I was leaving told me how much more expensive things are going to be since the fires in California...everyone wanting to move here. I already found another house cheaper/better.
It isn't just a regional problem.
The supply of housing is more elastic than you think. Some people have spare bedrooms, or second homes in LA. They may have previously chosen to leave them vacant, but for many people the higher rates they can get on Airbnb can entice them to list them. This happens at the margins—it’s not an all or nothing thing. So the higher people can earn renting out available space, the more they’ll be willing to rent. At some price point, even a billionaire will rent out their garage.
So? Let the free market define the correct price. It’s not like there’s thousands of alternatives to their platform that are better for both renter and landlord, and by regulating them into controlled prices all you’re doing is cementing their monopoly position. Haven’t we learned this lesson yet?
How is it any different than "congestion pricing"? Last time I experienced such, was on my way from the airport to the city. Unfortunately someone had jumped on the tracks, and the trains were locked down for 3 hours while the police etc. came to investigate the scene. During peak hours. Lines to the taxi and bus must have been 200 meters long and 5 meters wide. Checked out Uber, got something like $250 for a 30 min drive.
Not that I necessarily support extortionate pricing like that, but we do live in a capitalistic society.
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Shooting the messenger is always what is done when the facts on the ground can no longer be ignored, but acknowledging them would threaten the comfort of denial.
"Shooting the messenger" (to quote you) is what happens when the messenger is an incompetent idiot, who fails miserably at their job and takes down the entire UN with them. Being a corrupt terrorist sympathizer who is funded by Hamas doesn't help said messenger either.
Getting into any kind of online discussion with the "$X is khamass" crowd is generally futile.
Just pointing out a fact about AirBnB with source seems to be futile. Interesting, I would love to see the up/down votes and how they progress over time.
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calling the airbnb landlord a "host" and not instead a "parasite" :/
so brave of you. Everyone is clapping
This is an absurd diversion from how poorly LA leadership is performing.
Six months on, and no permits have been drawn for the Palisades/Malibu reconstruction. There are 7,000 destroyed homes, in the most bureaucratic municipality for a permitting and development process. This will be particularly true for anything that requires Coastal Commission oversight. Their job is to get you to leave.
LA city sold $1 billion in bonds this year, not for strategic efforts, but to keep the lights on and water running. They basically punted and said part of the DPW is a project and we want to sell $1 billion in bonds.
In previous years, LA city annual spend includes $700+ million for homeless, and $350+ million for liability payments. It's basically a giant pot of money for a huge feeding frenzy.
Sure, the fire department has an insufficient budget, but no-one talks about 30% of all fires are started by the homeless, and why are they allowed to live under an interstate overpass anyway?
Some of those 7,000 homeowners displaced by the fire may give up and leave. Those that remain are going after LA leadership in court. LA will see massive lawsuits from homeowners and businesses, possibly the state government.
> why are they allowed to live under an interstate overpass anyway?
Genuine question because you seem passionate about it and I don’t have a good answer for this, I wrestle with it often.
Where should they put themselves instead? Or where should the state allow them to be?
https://www.nfpa.org/news-blogs-and-articles/blogs/2023/11/1...
"...sources with knowledge of the incident have told news outlets that it appears to have been intentionally set and that the storage of wood pallets and hand sanitizer under the overpass contributed to the intensity of the blaze. Both wood pallets and hand sanitizer are known to fuel fires."
Why was there bulk pallets and hand sanitizer? It's basically kindling, with a napalm icing. Look at the photo. It is likely this product was stored there due to it was removed from somewhere else where it was illegally stored. And it was likely to be a business operating illegally, without the proper licenses and permits. Or they needed to dispose of the product and simply did not want to pay for it.
Governor Newsom has already acknowledged this was and is a failure of governance.
Was this meant to be a reply to a different comment?
It might seem logical to connect the number of fires and the fire department budget, after all, it's right there in the name! But in reality, most fire departments spend almost none of their time putting out fires. It's mostly first-responder/EMT work.
Is that 30% by calls, firefighter hours, or damage arising? I can imagine if you count every illegal campfire it would distort the picture.