The availability of big data and increasing sophistication of algorithms and artificial intelligence has had an evolving impact on strategic decision-making across sectors. Pricing algorithms can assist firms to optimize pricing on a near real-time basis in response to competitors’ strategic moves through the rapid analysis of vast quantities of market data.  They can also be used — as has been demonstrated by government enforcement actions — to facilitate sophisticated collusion between competitors. And, for some time now, antitrust experts have debated a related question:  when might these pricing algorithms become sufficiently sophisticated to cross the line from a tool used by businesses to execute strategies created by humans to AI that has the capacity to collude with other market participants without human intervention. As the technological and legal landscape evolves, compliance will become increasingly challenging. While the strategic benefits of technology are significant, it is important to keep a close eye on developments to ensure compliance measures keep pace with potential areas of risk.

By Sonia Kuester Pfaffenroth& Brian Desmarais[1]

 

I. INTRODUCTION

The availability of big data and increasing sophistication of algorithms and artificial intelligence has had an evolving impact on strategic decision-making across sectors ranging from airline pricing to ride sharing to e-commerce. Pricing algorithms can assist firms to optimize p

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