Tag Archives: cartels rental market United States

The Mystique of Mexican Drug Cartels

Homicides in Latin America are driven by violent cartels. The impact of Mexican cartels is especially far reaching because they prey upon undocumented migrants along the US-Mexico border, violate human rights, and weaken political and economic institutions. However, cartels remain mysterious despite being a major employer. Because understanding how Mexican cartels function is essential to attenuating their power, Prieto-Curiel et al. conducted a sophisticated analysis that estimated their population size and examined factors driving cartel growth and shrinkage. Factors included “recruitment” (new cartel members join), “incapacitation” (police incarcerate or arrest members), “conflict” (cartels fight other cartels), and “saturation” (members leave). Findings suggest that reducing “recruitment” instead of increasing “incapacitation” is a much more effective policy to decrease violence. This is because cartels are one of the biggest employers in Mexico. Recruiting between 350 and 370 people per week is essential to avoid their collapse because of aggregate losses. 

Summary of Rafael Prieto-Curiel  et al., Reducing cartel recruitment is the only way to lower violence in Mexico, Science, Sept. 21, 2023

Algorithmic Cartels and the Rentiers

Legal pressure is mounting on a property-management software company, RealPage, facing allegations that it illegally fixes apartment rent prices at buildings across the U.S….The Justice Department  has opened a criminal investigation into the company, according to people familiar with the matter….RealPage’s algorithmic pricing system analyzes huge troves of information about the apartment rental market. It then recommends to landlords how much to increase rent for each lease renewal, or what to ask for newly vacated apartments. At issue is whether the use of this pricing system amounts to an illegal rent-setting cartel among landlords, artificially boosting the rents paid by apartment tenants over many years. 

Arizona Attorney General Kris Mayes alleges that, in Phoenix and Tucson, RealPage pooled nonpublic pricing data from competing building owners, then fed the data into an algorithm that told landlords to push rents higher than they might have otherwise. RealPage then discouraged landlords from deviating from the algorithm’s suggested rents, according to the attorney general’s filing.“There is no competitive rental market in Arizona anymore, ” Mayes said in an interview. “Because RealPage sets the price.”

Texas-based RealPage was founded in 1998. It acquired the YieldStar pricing platform from publicly traded landlord Camden Property Trust in 2002. Private-equity firm Thoma Bravo purchased RealPage in 2021 for nearly $10 billion.  Federal charges could prove disastrous not only for RealPage but also for the many landlords and property managers who use its technology. That includes some of the largest real-estate companies on Wall Street. 

Excerpts from Will Parker, Alleged Rent-Fixing of Apartments Nationwide Draws More Legal Scrutiny, WSJ, Apr. 15, 2024