Yep, I have a friend that worked in anti-trust for the French government and she gave the example of "garanteed lowest prices" — looks great on the surface but actually serves to constantly monitor the pricing landscape.
For example I know that some e-commerce sites adjust their prices by using web scrapers. They scrape their competitors' sites and always offer products to 1 USD less than the competitor to make more sales.
I think this should violate competition law, but it somehow doesn't.
Sounds like a startup idea: find a way to identify this scraper traffic and offer different pricing to the scraper (maybe higher, maybe punitively lower).
Since everyone here seems to misunderstand how collusion works: Monitoring your competitor‘s prices to undercut them is the opposite of collusion - that‘s how competition is supposed to work, everyone trying to give the better price!
It is similar to a prisoner‘s dilemma, with a Nash equilibrium at consumer-friendly prices.
Tacit collusion, on the other hand, makes use of the iterated nature of the "game“, and utilizes a tit-for-tat strategy: If you undercut me, I‘ll set prices even lower at uneconomical levels for some time, to punish you for it. If you take the hint and set a high price, I‘ll reward you by matching it and we both rake in that sweet margin.
Of course, a real-world tacit collusion strategy is more complex, and algorithmic pricing certainly helps with implementing it - especially as it makes it easier to commit to a strategy ahead of time, which is very useful from a game theoretic standpoint.
>that‘s how competition is supposed to work, everyone trying to give the better price!
Maybe if the price is being lowered, but raising prices based solely on external signal is only "better" for the companies coordinating the price increase.
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[ 5.1 ms ] story [ 38.7 ms ] threadI think this should violate competition law, but it somehow doesn't.
https://news.ycombinator.com/item?id=33744136
Basically the Nash equilibrium.
It is similar to a prisoner‘s dilemma, with a Nash equilibrium at consumer-friendly prices. Tacit collusion, on the other hand, makes use of the iterated nature of the "game“, and utilizes a tit-for-tat strategy: If you undercut me, I‘ll set prices even lower at uneconomical levels for some time, to punish you for it. If you take the hint and set a high price, I‘ll reward you by matching it and we both rake in that sweet margin.
Of course, a real-world tacit collusion strategy is more complex, and algorithmic pricing certainly helps with implementing it - especially as it makes it easier to commit to a strategy ahead of time, which is very useful from a game theoretic standpoint.
Maybe if the price is being lowered, but raising prices based solely on external signal is only "better" for the companies coordinating the price increase.