Algorithms Colluding to Raise Prices: Threat to Consumer Welfare Revealed!
Dynamic pricing in a market with two competing firms can lead to higher prices for consumers. By analyzing different pricing strategies, it was found that collusion between firms can harm consumers by increasing prices. A pricing algorithm was developed that can learn to set prices above what would be considered fair in a competitive market. This research suggests that algorithms can collude to manipulate prices and regulators should pay attention to this issue.