Pricing Algorithms as Third-Party Facilitators of Collusion
The Antitrust Source, December 2024.
Abstract
Several recent U.S. cases have highlighted the possibility that pricing algorithms can act as third-party facilitators of collusion. This article discusses that possibility and examines the economics of algorithmic pricing and competition, including the role that pricing software can play when third-party providers sell algorithms to multiple competitors in the same market.
Main Finding
Pricing algorithms may play an analogous role to a hub by collecting data from competing firms and potentially coordinating pricing decisions across competitors.
Policy Relevance
Antitrust analysis of algorithmic pricing should consider whether third-party software providers can facilitate coordination by helping firms overcome information-sharing and monitoring problems.
See Also
- [Policy]Algorithmic Pricing and Competition
- [Paper]Autonomous Algorithmic Collusion: Economic Research and Policy Implications
- [Paper]Algorithmic Pricing and Competition: Empirical Evidence from the German Retail Gasoline Market
- [Paper]Outsourcing Algorithm Development: Evidence from Contractors and LLMs
- [Paper]Interaction of Spectrum Auctions and Mobile Market Competition: Review of Theory and Evidence from European 4G Auctions
- [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