What Do We Know About Algorithmic Collusion Now? New Insights from the Latest Academic Research

10 Pages Posted: 29 Jul 2023 Last revised: 20 Apr 2024

See all articles by Ai Deng

Ai Deng

Charles River Associates; Johns Hopkins University; American Bar Association - American Bar Association

Date Written: 1 28, 2024

Abstract

Algorithmic collusion has captured the attention of the global antitrust community for the past several years. Deng (2020) provided a comprehensive survey of the pertinent literature in economics and computer science and a critical discussion. Over the past three years, new insights have emerged from academic research. These new insights have not only deepened our understanding of the intricate relationship between algorithms and competition but also begun challenging some previous findings once considered compelling evidence supporting the plausibility of autonomous algorithmic tacit collusion. In this article, I discuss these new insights, with a focus on the following questions:
- Can AIs have a "meeting of minds"?
- Is price increase post AI adoption a clear indication of collusion?
- What is the latest research in AI and Operational Research tell us about autonomous AI collusion? Didn't Calvano et al (2020) tell us that it is totally possible?
- What is an example of collusive AI algorithm (collusion by design)? How does it work?
- Which is more dangerous, dumb algorithms or smart algorithms?
- Does the use of 3rd party algorithm almost certainly lead to softening of competition and/or collusion?
- What should practitioner watch out for when evaluating the effect of algorithmic pricing?

Keywords: Algorithmic Collusion, AI, Antitrust, Competition, Pricing Algorithms, Machine Learning

Suggested Citation

Deng, Ai, What Do We Know About Algorithmic Collusion Now? New Insights from the Latest Academic Research (1 28, 2024). Available at SSRN: https://ssrn.com/abstract=4521959 or http://dx.doi.org/10.2139/ssrn.4521959

Ai Deng (Contact Author)

Charles River Associates ( email )

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Johns Hopkins University ( email )

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American Bar Association - American Bar Association ( email )

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