Algorithmic Collusion In A Price Oligopoly

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Algorithmic Collusion in a Price Oligopoly

Author : Thomas Loots
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (142 download)

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Book Synopsis Algorithmic Collusion in a Price Oligopoly by : Thomas Loots

Download or read book Algorithmic Collusion in a Price Oligopoly written by Thomas Loots and published by . This book was released on 2024 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: "This thesis demonstrates algorithmic collusion in a price oligopoly with multinomial logit demand. Of main interest is the scenario where competing firms independently adopt copies of the same price algorithm. One of the key takeaways is that in this scenario, major challenges to achieving and sustaining supra-competitive outcomes can be overcome by the firms. We show this by constructing competitive price algorithms that have collusive capabilities when at least one of the opponents uses a copy of the same algorithm. Importantly, the firms do not have to activate the algorithm at the same time, do not need to use the same input parameters, and do not need to know that they are using the same algorithm. Moreover, the proposed algorithms do not engage in illicit forms of communication or signaling, and therefore exemplify tacit (lawful) algorithmic collusion . This thesis thus contributes to the ongoing debate on the extent to which collusion by algorithms is possible within the confines of existing antitrust law and jurisprudence, and further contributes to the fields of axiomatic bargaining, dynamic pricing, and demand learning in the presence of competitors."--

Artificial Intelligence, Algorithmic Pricing and Collusion

Author : Emilio Calvano
Publisher :
ISBN 13 :
Total Pages : 44 pages
Book Rating : 4.:/5 (17 download)

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Book Synopsis Artificial Intelligence, Algorithmic Pricing and Collusion by : Emilio Calvano

Download or read book Artificial Intelligence, Algorithmic Pricing and Collusion written by Emilio Calvano and published by . This book was released on 2018 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pricing algorithms are increasingly replacing human decision making in real marketplaces. To inform the competition policy debate on possible consequences, we run experiments with pricing algorithms powered by Artificial Intelligence in controlled environments (computer simulations). In particular, we study the interaction among a number of Q-learning algorithms in the context of a workhorse oligopoly model of price competition with Logit demand and constant marginal costs. We show that the algorithms consistently learn to charge supra-competitive prices, without communicating with each other. The high prices are sustained by classical collusive strategies with a finite punishment phase followed by a gradual return to cooperation. This finding is robust to asymmetries in cost or demand and to changes in the number of players.

Algorithmic Tacit Collusion

Author : Valeria Caforio
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Algorithmic Tacit Collusion by : Valeria Caforio

Download or read book Algorithmic Tacit Collusion written by Valeria Caforio and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In light of the ongoing debate on algorithmic collusion, this paper intends to answer the following question: should algorithmic tacit collusion be prohibited under EU competition law? By algorithmic tacit collusion it is meant the capability of algorithmic pricing agents to unilaterally engage into tacitly collusive strategies without human intervention (we also call it 'machine-to-machine cooperation' or 'algorithmic interdependent pricing'). Essentially, this practice raises the very same issues as the well-known oligopoly problem. Therefore, to make it prohibited one could envisage the traditional proposed solution of disentangling the categories of article 101 TFEU from the notions of an 'act of reciprocal communication between firms' or 'meeting of minds'. The paper sets out to discuss this option and its implications. It argues that, from a competition law standpoint, although algorithmic tacit collusion remains undesirable, the notions of agreement and concerted practices should not be changed to encompass it. Rather, it embraces a regulatory perspective referred to as 'algorithms by design' which relies on introducing a legal obligation for firms to program algorithms in such a way as to prevent them from setting oligopolistic prices. In particular, while exploring this regulatory proposal, the paper discusses the peculiar case of algorithms that, though designed not to violate antitrust law, end up charging collusive prices. In this regard, the paper develops a second proposal: it introduces the idea of 'outcome visibility' to nail firms to their responsibility. This concept implies the idea that even if firms are not aware that their pricing algorithms are implementing a collusive strategy, they cannot ignore their visible market outcome.

Product Rankings, AI Pricing Algorithms, and Collusion

Author : Liying Qiu
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Product Rankings, AI Pricing Algorithms, and Collusion by : Liying Qiu

Download or read book Product Rankings, AI Pricing Algorithms, and Collusion written by Liying Qiu and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Reinforcement learning (RL) based pricing algorithms have been shown to tacitly collude to set supra-competitive prices in oligopoly models of repeated price competition. We investigate the impact of ranking systems, a common feature of online marketplaces, on algorithmic collusion in prices. We study experimentally the behavior of algorithms powered by Artificial Intelligence (deep Q-learning) in a workhorse duopoly model of repeated price competition in the presence of product rankings. Through extensive experiments, we find that the introduction of the ranking system significantly mitigates the tacit collusion that stems from RL based pricing. The ranking system increases the incentives for the RL agents to deviate from a collusive price which in turn requires more complicated punishment strategies to prevent deviation and sustain collusive prices. These punishment strategies are harder to learn for RL algorithms in non stationary environments and the high collusive prices are not sustained as a result. The ranking system's mitigation effect is moderated by the horizontal differentiation between the products offered by the firms and the stickiness of product ranks. In particular, when products are more horizontally differentiated from each other and when past sales have a larger influence on product ranks (sticky ranking), the prices charged by the two firms are higher and the ranking system's mitigation effect is weaker. However, in both cases, prices in the presence of ranking are lower than that in the absence of ranking. Our analysis sheds light on the impact of ranking systems on consumer welfare and on design of ranking systems to prevent algorithmic pricing collusion.

Algorithmic Collusion

Author : Karsten T. Hansen
Publisher :
ISBN 13 :
Total Pages : 25 pages
Book Rating : 4.:/5 (113 download)

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Book Synopsis Algorithmic Collusion by : Karsten T. Hansen

Download or read book Algorithmic Collusion written by Karsten T. Hansen and published by . This book was released on 2020 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Motivated by their increasing prevalence, we study outcomes when competing sellers use machine learning algorithms to run real-time dynamic price experiments. These algorithms are often misspecified, ignoring the effect of factors outside their control, e.g. competitors' prices. We show that the long-run prices depend on the informational value (or signal to noise ratio) of price experiments: if low, the long-run prices are consistent with the static Nash equilibrium of the corresponding full information setting. However, if high, the long-run prices are supra-competitive -- the full information joint-monopoly outcome is possible. We show this occurs via a novel channel: competitors' algorithms' prices end up running correlated experiments. Therefore, sellers' misspecified models overestimate own price sensitivity, resulting in higher prices. We discuss the implications on competition policy.

Virtual Competition

Author : Ariel Ezrachi
Publisher : Harvard University Press
ISBN 13 : 0674545478
Total Pages : 365 pages
Book Rating : 4.6/5 (745 download)

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Book Synopsis Virtual Competition by : Ariel Ezrachi

Download or read book Virtual Competition written by Ariel Ezrachi and published by Harvard University Press. This book was released on 2016-11-14 with total page 365 pages. Available in PDF, EPUB and Kindle. Book excerpt: “A fascinating book about how platform internet companies (Amazon, Facebook, and so on) are changing the norms of economic competition.” —Fast Company Shoppers with a bargain-hunting impulse and internet access can find a universe of products at their fingertips. But is there a dark side to internet commerce? This thought-provoking exposé invites us to explore how sophisticated algorithms and data-crunching are changing the nature of market competition, and not always for the better. Introducing into the policy lexicon terms such as algorithmic collusion, behavioral discrimination, and super-platforms, Ariel Ezrachi and Maurice E. Stucke explore the resulting impact on competition, our democratic ideals, our wallets, and our well-being. “We owe the authors our deep gratitude for anticipating and explaining the consequences of living in a world in which black boxes collude and leave no trails behind. They make it clear that in a world of big data and algorithmic pricing, consumers are outgunned and antitrust laws are outdated, especially in the United States.” —Science “A convincing argument that there can be a darker side to the growth of digital commerce. The replacement of the invisible hand of competition by the digitized hand of internet commerce can give rise to anticompetitive behavior that the competition authorities are ill equipped to deal with.” —Burton G. Malkiel, Wall Street Journal “A convincing case for the need to rethink competition law to cope with algorithmic capitalism’s potential for malfeasance.” —John Naughton, The Observer

Robotics, AI and the Future of Law

Author : Marcelo Corrales
Publisher : Springer
ISBN 13 : 9811328749
Total Pages : 245 pages
Book Rating : 4.8/5 (113 download)

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Book Synopsis Robotics, AI and the Future of Law by : Marcelo Corrales

Download or read book Robotics, AI and the Future of Law written by Marcelo Corrales and published by Springer. This book was released on 2018-11-02 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: Artificial intelligence and related technologies are changing both the law and the legal profession. In particular, technological advances in fields ranging from machine learning to more advanced robots, including sensors, virtual realities, algorithms, bots, drones, self-driving cars, and more sophisticated “human-like” robots are creating new and previously unimagined challenges for regulators. These advances also give rise to new opportunities for legal professionals to make efficiency gains in the delivery of legal services. With the exponential growth of such technologies, radical disruption seems likely to accelerate in the near future. This collection brings together a series of contributions by leading scholars in the newly emerging field of artificial intelligence, robotics, and the law. The aim of the book is to enrich legal debates on the social meaning and impact of this type of technology. The distinctive feature of the contributions presented in this edition is that they address the impact of these technological developments in a number of different fields of law and from the perspective of diverse jurisdictions. Moreover, the authors utilize insights from multiple related disciplines, in particular social theory and philosophy, in order to better understand and address the legal challenges created by AI. Therefore, the book will contribute to interdisciplinary debates on disruptive new AI technologies and the law.

The Economics of Artificial Intelligence

Author : Ajay Agrawal
Publisher : University of Chicago Press
ISBN 13 : 0226833127
Total Pages : 172 pages
Book Rating : 4.2/5 (268 download)

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Book Synopsis The Economics of Artificial Intelligence by : Ajay Agrawal

Download or read book The Economics of Artificial Intelligence written by Ajay Agrawal and published by University of Chicago Press. This book was released on 2024-03-05 with total page 172 pages. Available in PDF, EPUB and Kindle. Book excerpt: A timely investigation of the potential economic effects, both realized and unrealized, of artificial intelligence within the United States healthcare system. In sweeping conversations about the impact of artificial intelligence on many sectors of the economy, healthcare has received relatively little attention. Yet it seems unlikely that an industry that represents nearly one-fifth of the economy could escape the efficiency and cost-driven disruptions of AI. The Economics of Artificial Intelligence: Health Care Challenges brings together contributions from health economists, physicians, philosophers, and scholars in law, public health, and machine learning to identify the primary barriers to entry of AI in the healthcare sector. Across original papers and in wide-ranging responses, the contributors analyze barriers of four types: incentives, management, data availability, and regulation. They also suggest that AI has the potential to improve outcomes and lower costs. Understanding both the benefits of and barriers to AI adoption is essential for designing policies that will affect the evolution of the healthcare system.

A Dynamic Oligopoly with Collusion and Price Wars

Author : Chaim Fershtman
Publisher :
ISBN 13 :
Total Pages : 56 pages
Book Rating : 4.3/5 ( download)

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Book Synopsis A Dynamic Oligopoly with Collusion and Price Wars by : Chaim Fershtman

Download or read book A Dynamic Oligopoly with Collusion and Price Wars written by Chaim Fershtman and published by . This book was released on 1999 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most of the theoretical work on collusion and price wars assumes identical firms and an unchanging environment, assumptions which are at odds with what we know about most industries. Further that literature focuses on the impact of collusion on prices. Whether an industry can support collusion also effects investment incentives and hence the variety, cost, and quality of the products marketed. We provide a collusive framework with heterogeneity among firms, investment, entry, and exit. It is a symmetric information model in which it is hard to sustain collusion when either one of the firms does not keep up with the advances of its competitors, or a low quality' entrant enters. In either case there will be an active firm that is quite likely to exit after it deviates, but if one of the competitors is near an exit state the other incumbent(s) has an incentive to price predatorily (that is to deviate themselves). We use numerical analysis to compare an institutional structure that allows for collusion to one which does not (perhaps because of an active antitrust authority). Price paths clearly differ in the two environments; in particular only the collusive industry generates price wars. The collusive industry offers both more and higher quality products to consumers, albeit often at a higher price. The positive effect of collusion on the variety and quality of products marketed more than compensates consumers for the negative effect of collusive prices, so that consumer surplus is larger in the collusive environment.

The Antitrust Paradox

Author : Robert Bork
Publisher :
ISBN 13 : 9781736089712
Total Pages : 536 pages
Book Rating : 4.0/5 (897 download)

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Book Synopsis The Antitrust Paradox by : Robert Bork

Download or read book The Antitrust Paradox written by Robert Bork and published by . This book was released on 2021-02-22 with total page 536 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.

EU Competition Law

Author : Ariel Ezrachi
Publisher : Bloomsbury Publishing
ISBN 13 : 1782254803
Total Pages : 1008 pages
Book Rating : 4.7/5 (822 download)

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Book Synopsis EU Competition Law by : Ariel Ezrachi

Download or read book EU Competition Law written by Ariel Ezrachi and published by Bloomsbury Publishing. This book was released on 2014-09-04 with total page 1008 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is the fourth edition of a highly practical guide to the leading cases in European Competition Law. It explores the application of Article 101 TFEU, Article 102 TFEU and the European Merger Regulation, as well as the public and private enforcement of Competition Law. In addition, it reviews the intersection between Competition Law and Intellectual Property Rights and the application of Competition Law to State action. Each chapter outlines the relevant laws, regulations and guidelines for each topic. Within this framework, cases are reviewed in summary form, accompanied by analysis and commentary. Endorsements: 'This book should be in the library of every competition law practitioner and academic. The summary of cases is first class. But what makes it really stand out is the quality of the commentary and the selection of the material which includes not only the most important European judgements and decisions but also some of the leading cases from the US and European Member States.'Ali Nikpay, Gibson, Dunn & Crutcher LLP, Former Senior Director, Office of Fair Trading 'The study of EU Competition law requires the analysis and understanding of a number of increasingly complex European Commission and European Court decisions. Through the provision of case summaries, excerpts from the important passages and concise commentary linking these decisions to other key case law and Commission documents, this unique and impressive book, now in its fourth edition, provides the student and practitioner of EU competition law with an extremely clear and useful introduction to these leading decisions' Dr Kathryn McMahon, Associate Professor, School of Law, University of Warwick 'The Guide is an invaluable tool for both students and practitioners. It provides a compact overview on the fundamental cases and highlights the essential problems in a clear and sharp analysis.' Dr Christoph Voelk, Antitrust Practice Group, McDermott, Will & Emery LLP 'This book is especially valuable to competition law specialists in Europe and abroad who are interested in the jurisprudence and policy of the European Union and its member states. Familiarity with the European regime is essential for proficiency in competition law today, and this volume provides an excellent foundation.' William E Kovacic, Global Competition Professor of Law and Policy, George Washington University Law School, Former Chairman, US Federal Trade Commission

A Computational Algorithm for Optimal Collusion in Dynamic Cournot Oligopoly

Author : David Roth
Publisher :
ISBN 13 :
Total Pages : 20 pages
Book Rating : 4.:/5 (287 download)

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Book Synopsis A Computational Algorithm for Optimal Collusion in Dynamic Cournot Oligopoly by : David Roth

Download or read book A Computational Algorithm for Optimal Collusion in Dynamic Cournot Oligopoly written by David Roth and published by . This book was released on 1992 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Algorithmic Pricing & Collusion; The Limits of Antitrust Enforcement

Author : Sumit Bhadauria
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Algorithmic Pricing & Collusion; The Limits of Antitrust Enforcement by : Sumit Bhadauria

Download or read book Algorithmic Pricing & Collusion; The Limits of Antitrust Enforcement written by Sumit Bhadauria and published by . This book was released on 2020 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The combination of big data, large storage capacity and computational power has strengthened the emergence of algorithms in making myriads of business decision. It allows business to gain a competitive advantage by making automatic and optimize decision making. In particular, the use of pricing algorithms allows business to match the demand and supply equilibrium by monitoring & setting dynamic pricing. It benefits consumer alike to see and act on fast changing prices. However, on the downside, the widespread use of algorithm in an industry has the effect of altering the structural characteristic of market such as price transparency, high speed trading which increases the likelihood of collusion. The ability of pricing algorithm to solve the cartel incentive problem by quickly detecting and punishing the deviant further strengthen the enforcement of price fixing agreement. In addition, the use of more advance forms of algorithm such as self-learning algorithm allows business to achieve a tacitly collusive outcome in limited market characteristic even without communication between humans. This raises the fundamental challenge for anti-cartel enforcement as the current law in most jurisdictions is ill-equipped to deal with algorithmic facilitated tacit collusion. The legality of tacit collusion is questionable primarily because the pricing algorithm has the ability to alter the market characteristics where the tacitly collusive outcome is difficult to achieve; thus widening the scope of the so-called 'oligopoly problem'. This paper studies the usages of pricing algorithms by business in online markets. In particular, the paper identify the conditions under which the algorithm prices causes the harm to consumers. It seeks to analyze how algorithms might facilitate or even causes the collusive outcome without human interventions. Further, it looks at the legal challenges faced by the competition authorities around the globe to deal with the algorithmic let collusion and examine the various approaches suggested to counter act it.

The Theory of Collusion and Competition Policy

Author : Joseph E. Harrington, Jr.
Publisher : MIT Press
ISBN 13 : 0262036932
Total Pages : 145 pages
Book Rating : 4.2/5 (62 download)

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Book Synopsis The Theory of Collusion and Competition Policy by : Joseph E. Harrington, Jr.

Download or read book The Theory of Collusion and Competition Policy written by Joseph E. Harrington, Jr. and published by MIT Press. This book was released on 2017-11-16 with total page 145 pages. Available in PDF, EPUB and Kindle. Book excerpt: A review of the theoretical research on unlawful collusion, focusing on the impact and optimal design of competition law and enforcement. Collusion occurs when firms in a market coordinate their behavior for the purpose of producing a supracompetitive outcome. The literature on the theory of collusion is deep and broad but most of that work does not take account of the possible illegality of collusion. Recently, there has been a growing body of research that explicitly focuses on collusion that runs afoul of competition law and thereby makes firms potentially liable for penalties. This book, by an expert on the subject, reviews the theoretical research on unlawful collusion, with a focus on two issues: the impact of competition law and enforcement on whether, how long, and how much firms collude; and the optimal design of competition law and enforcement. The book begins by discussing general issues that arise when models of collusion take into account competition law and enforcement. It goes on to consider game-theoretic models that encompass the probability of detection and penalties incurred when convicted, and examines how these policy instruments affect the frequency of cartels, cartel duration, cartel participation, and collusive prices. The book then considers the design of competition law and enforcement, examining such topics as the formula for penalties and leniency programs. The book concludes with suggested future lines of inquiry into illegal collusion.

The Cambridge Handbook of the Law of Algorithms

Author : Woodrow Barfield
Publisher : Cambridge University Press
ISBN 13 : 1108663184
Total Pages : 1327 pages
Book Rating : 4.1/5 (86 download)

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Book Synopsis The Cambridge Handbook of the Law of Algorithms by : Woodrow Barfield

Download or read book The Cambridge Handbook of the Law of Algorithms written by Woodrow Barfield and published by Cambridge University Press. This book was released on 2020-11-05 with total page 1327 pages. Available in PDF, EPUB and Kindle. Book excerpt: Algorithms are a fundamental building block of artificial intelligence - and, increasingly, society - but our legal institutions have largely failed to recognize or respond to this reality. The Cambridge Handbook of the Law of Algorithms, which features contributions from US, EU, and Asian legal scholars, discusses the specific challenges algorithms pose not only to current law, but also - as algorithms replace people as decision makers - to the foundations of society itself. The work includes wide coverage of the law as it relates to algorithms, with chapters analyzing how human biases have crept into algorithmic decision-making about who receives housing or credit, the length of sentences for defendants convicted of crimes, and many other decisions that impact constitutionally protected groups. Other issues covered in the work include the impact of algorithms on the law of free speech, intellectual property, and commercial and human rights law.

Hub-and-Spoke Cartels

Author : Luke Garrod
Publisher : MIT Press
ISBN 13 : 0262046202
Total Pages : 303 pages
Book Rating : 4.2/5 (62 download)

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Book Synopsis Hub-and-Spoke Cartels by : Luke Garrod

Download or read book Hub-and-Spoke Cartels written by Luke Garrod and published by MIT Press. This book was released on 2021-11-16 with total page 303 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first comprehensive economic and legal analysis of hub-and-spoke cartels, with detailed case studies. A cartel forms when competitors conspire to limit competition through coordinated actions. Most cartels are composed exclusively of firms that would otherwise be in competition, but in a hub-and-spoke cartel, those competitors (“spokes”) conspire with the assistance of an upstream supplier or a downstream buyer (“hub”). This book provides the first comprehensive economic and legal analysis of hub-and-spoke cartels, explaining their formation and how they operate to create and sustain a collusive environment. Sixteen detailed case studies, including cases brought against toy manufacturer Hasbro and the Apple ebook case, illustrate the economic framework and legal strategies discussed. The authors identify three types of hub-and-spoke cartels: when an upstream firm facilitates downstream firms to coordinate on higher prices; when a downstream intermediary facilitates upstream suppliers to coordinate on higher prices; and when a downstream firm facilitates upstream suppliers to exclude a downstream rival. They devote a chapter to each type, discussing the formation, coordination, enforcement, efficacy, and prosecution of these cartels, and consider general lessons that can be drawn from the case studies. Finally, they present strategies for prosecuting hub-and-spoke collusion. The book is written to be accessible to both economists and lawyers, and is intended for both scholars and practitioners.

Algorithmic Price Recommendations and Collusion

Author : Matthias Hunold
Publisher :
ISBN 13 : 9783863044091
Total Pages : 0 pages
Book Rating : 4.0/5 (44 download)

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Book Synopsis Algorithmic Price Recommendations and Collusion by : Matthias Hunold

Download or read book Algorithmic Price Recommendations and Collusion written by Matthias Hunold and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the collusive and competitive effects of algorithmic price recommendations on market outcomes. These recommendations are often non-binding and common in many markets, especially on online platforms. We develop a theoretical framework and derive two algorithms that recommend collusive pricing strategies. Utilizing a laboratory experiment, we find that sellers condition their prices on the recommendation of the algorithms. The algorithm with a soft punishment strategy lowers market prices and has a pro-competitive effect. The algorithm that recommends a subgame perfect equilibrium strategy increases the range of market outcomes, including more collusive ones. Variations in economic preferences lead to heterogeneous treatment effects and explain the results.