“Welcome To The Hotel California”:The Beast of Algorithmic Pricing

By Jay L. Himes & Tianran Song 

The emergence of the internet and technological invocation has nurtured development of dynamic pricing algorithms, capable of monitoring market activity and of setting product prices. Efficiency in pricing, eventually reaching equilibrium where supply and demand meet, is the holy grail of economics. But what if implementation practicalities produce prices that favor suppliers over customers, with monopoly prices squeezing surplus from consumers? Algorithmic pricing that facilitates coordinated prices adopted by competitors implicates the core concerns of antitrust law. This paper discusses limits of prevailing antitrust law to deal with these circumstances, and the need to look beyond when antitrust does not provide an obvious answer.

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