Algorithmic pricing: What every antititrust lawyer needs to know

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Advances in technology have made it possible for businesses to use algorithms to monitor their rivals’ prices and adjust their own automatically, raising questions over whether pricing algorithms might facilitate or exacerbate anticompetitive or collusive conduct without human intervention. Professor Tadelis and Dr. Smith explain how pricing algorithms work from an economic perspective and distinguish procompetitive uses from the various forms of potential anticompetitive conduct, including horizontal price-fixing, vertical price-fixing, and price discrimination. They note that, although the use of algorithms to monitor and set prices has increased considerably over time, it remains empirically unclear whether algorithmic pricing is more likely to threaten or to benefit market competition.