Algorithmic collusion : an interdisciplinary perspective
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Pier Luigi PARCU, Maria Alessandra ROSSI and Marco BOTTA (eds), Research handbook on competition and technology, Cheltenham ; Northampton : Edward Elgar Publishing, 2025, Research handbooks in competition law, pp. 127-150
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HANSPACH, Philip, GALLI, Niccolò, Algorithmic collusion : an interdisciplinary perspective, in Pier Luigi PARCU, Maria Alessandra ROSSI and Marco BOTTA (eds), Research handbook on competition and technology, Cheltenham ; Northampton : Edward Elgar Publishing, 2025, Research handbooks in competition law, pp. 127-150 - https://hdl.handle.net/1814/92746
Abstract
Software programmes based on algorithms have become common in pricing because they outperform humans at automatising tasks in terms of speed, complexity, and accuracy of analysis. In many online markets, repricing algorithms have replaced the human decision maker. As with any other technology employed in the market, repricing algorithms empower human activity toward both positive and negative consequences. Their properties enable market transparency and efficiencies but also entail collusion risks beyond traditional oligopolies. This chapter analyses why repricing algorithms can facilitate anti-competitive coordination and what the scope for Art. 101(1) TFEU is to tackle it. Acknowledging the limitations of EU competition law against collusion by autonomous algorithms, we qualify the antitrust concern through the economics and computer science understanding of pricing algorithms. Algorithmic pricing does not always lead to higher prices, although even simple algorithms can learn complex reward-punishment schemes that resemble collusive pricing strategies.
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Published: 20 May 2025