Algorithmic Pricing and Competition
CPI Antitrust Chronicle, June 2023.
Abstract
This CPI Antitrust Chronicle article examines the impact of AI-driven algorithmic pricing software. It summarizes empirical evidence from Germany's retail gasoline market, where algorithmic pricing software became widely available in 2017. The evidence suggests that adoption increased margins, especially in competitive markets, indicating that algorithmic pricing may have softened competition.
Main Finding
Adoption of algorithmic pricing increased margins in the German retail gasoline market, with stronger effects in competitive markets and in small oligopoly markets where all stations adopted.
Policy Relevance
Competition authorities should evaluate algorithmic pricing using empirical evidence on market structure, adoption patterns, and pricing responses, not only theoretical concerns about algorithmic collusion.
See Also
- [Paper]Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market
- [Policy]Pricing Algorithms as Third-Party Facilitators of Collusion
- [Paper]Autonomous Algorithmic Collusion: Economic Research and Policy Implications
- [Paper]Interaction of Spectrum Auctions and Mobile Market Competition: Review of Theory and Evidence from European 4G Auctions
- [Paper]Outsourcing Algorithm Development: Evidence from Contractors and LLMs
- [Paper]Frontiers: How Much Influencer Marketing Is Undisclosed? Evidence from Twitter
- [Paper]The Effects of Advertising Disclosure Regulations on Social Media: Evidence from Instagram
- [Paper]Sharing News Left and Right: Frictions and Misinformation on Twitter