Live Breaking News & Updates on Consumer Goods Issue

Algorithms are now playing a central role in digital marketplaces, setting prices and automatically responding in real time to competitors’ behaviour. The deployment of automated pricing algorithms is scrutinized by economists and regulatory agencies, concerned about its impact on prices and competition. Existing research has so far been limited to cases where all firms use the same algorithm, suggesting that anti-competitive behaviour might spontaneously arise in that setting. Here we introduce and study a general anti-competitive mechanism, adversarial collusion, where one firm manipulates other sellers that use their own pricing algorithm. We propose a network-based framework to model the strategies of pricing algorithms on iterated two-firm and three-firm markets. In this framework, an attacker learns to endogenize competitors’ algorithms and then derive a strategy to artificially increase its profit at the expense of competitors. Facing a drastic loss of profits, compe ....

United Kingdom , Great Britain , Michael Eisen , Bruno Salcedo , Office For National Statistics , International World Wide Web Conferences Steering Committee , International Conference On Knowledge Discovery , Council Of European Union Commission , National Statistics , Consumer Goods Issue , Economic Working Paper , Facilitate Collusion , Personalised Pricing , Markets Authority , Competition Policy , Digital Age , World Wide Web , Law Econ , Empirical Evidence , German Retail Gasoline Market , Working Paper , Law Pract , Knowledge Discovery , Data Mining , Computer Vision , Pattern Recognition ,