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Convergence Rates and Collusive Outcomes of Pricing Algorithms

Frick, Kevin Michael - 2023

Artificial intelligence algorithms are increasingly used by firms to set prices. Previous research on pricing algorithms shows that they can exhibit collusive behavior, but it has so far remained an open question whether they can do so in a reasonably short time. I develop a deep reinforcement...

Persistent link: https://www.econbiz.de/10014343902

Facilitating Collusion with Spot-Price Contracting

Hatfield, John William; Lowery, Richard - 2023

We investigate the competitive effects of spot-price contracting, in which a buyer and seller contract to transact at a future date at the price prevailing in that market at that future date (the ``spot price''); such contracts are ubiquitous in the beef-processing industry, among others. We...

Persistent link: https://www.econbiz.de/10014343916

Stable Cartel Configurations : The Case of Multiple Cartels

Khan, Abhimanyu; Peeters, Ronald - 2023

which assumes, without further justification, that at most a single cartel may be formed, and we show that this … consideration has markedly different implications for cartel stability. We define a cartel configuration to be stable if: (i) a firm … in a cartel does not find it more profitable to leave the cartel and operate independently, (ii) a firm that operates …

Persistent link: https://www.econbiz.de/10014347319

Competitor Coupons : A Remedy for Residual Collusion

Harrington Jr, Joseph E. - 2023

There are well-documented episodes for which prices remained at supracompetitive levels even after a cartel had been …. As part of the penalty imposed by the competition authority, each cartel member is required to distribute coupons to its …

Persistent link: https://www.econbiz.de/10014347659

Estimating Vitamin Cartel’s Overcharges : A Time-Series Approach

Mehta, Kirtikumar - 2023

An important issue in estimating cartel overcharges is to have a reliable estimate of the but-for-the-cartel price …. While the cartel price is observable, the but-for-the-cartel price is not. A construction of the but-for-cartel … previous non-cartelised period or constructs on cost-based data and mark-ups the but-for-price over the cartel period. This …

Persistent link: https://www.econbiz.de/10014348952

Algorithmic price recommendations and collusion : experimental evidence

Hunold, Matthias; Werner, Tobias - 2023

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...

Persistent link: https://www.econbiz.de/10014442786

Artificial collusion : examining supracompetitive pricing by Q-learning algorithms

Boer, Arnoud V. den; Meylahn, Janusz M.; Schinkel, … - 2022

We examine recent claims that a particular Q-learning algorithm used by competitors 'autonomously' and systematically learns to collude, resulting in supracompetitive prices and extra profits for the firms sustained by collusive equilibria. A detailed analysis of the inner workings of this...

Persistent link: https://www.econbiz.de/10013375353

Dynamics of Market Making Algorithms in Dealer Markets : Learning and Tacit Collusion

Cont, Rama; Xiong, Wei - 2022

The widespread use of market-making algorithms in electronic over-the-counter markets may give rise to unexpected effects resulting from the autonomous learning dynamics of these algorithms. In particular the possibility of `tacit collusion' among market makers has increasingly received...

Persistent link: https://www.econbiz.de/10013406004

Collusion and Coercion with Naive Rivals

Brown, Zach; MacKay, Alexander - 2023

Standard models of collusion require that all firms are forward-looking and strategic. When one firm displays naive behavior—i.e., when it is myopic, memoryless, or non-strategic—typical collusive strategies cannot be supported in equilibrium. Motivated by the increasing adoption of...

Persistent link: https://www.econbiz.de/10014255442

Collusion and Confusion

Hoernig, Steffen - 2023

In some markets firms offer a plethora of pricing schemes, for which the traditional economic interpretation is that firms practice price discrimination. We argue that there may be additional reasons for tariff proliferation if consumers have limited search capabilities. Firms may tacitly...

Persistent link: https://www.econbiz.de/10014260915