Algorithmic collusion: A critical review

Dorner, Florian E.

doi:10.48550/arxiv.2110.04740

Cited by 2 publications

(1 citation statement)

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“…Secondly, there's the phenomenon of algorithmic collusion, which we delve into in section five. [7] Ezrachi, Ariel, and Maurice E. Stucke contend that the widespread use of pricing algorithms can: 1) ease the path to collusion by automating adherence monitoring, 2) facilitate rapid retaliation against firms undercutting prices, and 3) foster "tacit" implicit collusive agreements, which evade detection as they don't rely on explicit communication. Contrary to mere price discrimination, pricing algorithms not only redistribute but can also drive colluding firms to intentionally reduce supply in a market to maintain elevated prices.…”

Section: Issues Raised By the Development Of Aimentioning

confidence: 99%

AI Pricing: Adoption of Artificial Intelligences and Collusive Price

Liu

2024

TCSISR

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With the growing integration of artificial intelligence (AI) in determining pricing strategies, there is an increasing concern about its potential to foster collusive behavior. Harrington (2012, 2018) underscores the challenge: if AI proves more adept at tacit collusion than humans or if AI-driven collusion is inherently tacit, then it presents a significant hurdle for prosecution under the prevailing interpretation of US antitrust laws. Validating these concerns, Assad et al. (2020) observed collusive price surges linked to the adoption of pricing algorithms among German gas stations. Drawing from game theory—specifically the repeated game paradigm—this paper crafts a foundational mathematical model to analyze competition versus collusion dynamics. It also evaluates the resultant welfare implications of both scenarios. The paper further delves into the broader challenges posed by AI-powered pricing and advocates for potential policy countermeasures, including algorithmic regulation and collusion detection mechanisms.

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Section: Issues Raised By the Development Of Aimentioning

confidence: 99%