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Dynamic Pricing Algorithms, Consumer Harm, and Regulatory Response

Pricing algorithms are rapidly transforming markets, from ride-sharing apps, to air travel, to online retail. Regulators and scholars have watched this development with a wary eye. Their focus so far has been on the potential for pricing algorithms to facilitate explicit and tacit collusion. This Article argues that the policy challenges pricing algorithms pose are far broader than collusive conduct. It demonstrates that algorithmic pricing can lead to higher prices for consumers in competitive markets and even in the absence of collusion. This consumer harm can be initiated by a single firm employing a superior pricing algorithm. Higher prices arise from the automated nature of algorithms, impacting any market where firms price algorithmically. Thus, pricing algorithms that are already in widespread use may allow sellers to extract a massive amount of wealth from consumers. Because this consumer harm arises even when firms do not collude, antitrust law can-not solve the problem. This Article looks to the history of pricing innovation in the early twentieth century to show how government can respond when new pricing technologies and strategies disrupt markets. It argues for pricing regulation as a feasible solution to the challenges non-collusive algorithmic pricing poses, and it proposes interventions targeted at when and how firms set prices
Year of publication:
[2021]
Authors: MacKay, Alexander ; Weinstein, Samuel
Publisher: [S.l.] : SSRN
Subject: Konsumentenverhalten | Consumer behaviour | Preismanagement | Pricing strategy | Regulierung | Regulation | Theorie | Theory
Extent:
1 Online-Ressource (57 p)
Type of publication: Book / Working Paper
Language: English
Notes:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 6, 2021 erstellt
Other identifiers:
10.2139/ssrn.3979147 [DOI]
Classification: D4 - Market Structure and Pricing ; D43 - Oligopoly and Other Forms of Market Imperfection ; K00 - Law and Economics. General ; K20 - Regulation and Business Law. General ; K21 - Antitrust Law ; K23 - Regulated Industries and Administrative Law ; L00 - Industrial Organization. General ; L11 - Production, Pricing, and Market Structure Size; Size Distribution of Firms ; L13 - Oligopoly and Other Imperfect Markets ; L40 - Antitrust Policy. General ; L50 - Regulation and Industrial Policy. General ; L51 - Economics of Regulation ; O33 - Technological Change: Choices and Consequences; Diffusion Processes
Source:
ECONIS - Online Catalogue of the ZBW
Persistent link: https://ebvufind01.dmz1.zbw.eu/10013310934
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