Fiocco, R., "Data analytics for algorithmic pricing"

Title:"Data analytics for algorithmic pricing" (joint work with Alessandro Bonatti and Salvatore Piccolo)

Speaker: Associate Professor Raffaele Fiocco, University of Bergamo

Host:  Assistant Professor Kospentaris Ioannis, Department of Economics, Athens University of Economics and Business

Time: 15.30 -17.00

Room:  76, Patission Str., Antoniadou Wing, 3rd floor, Room A36

Abstract: Firms often receive information through common intermediaries, such as data analytics companies. We characterize the optimal design of data analytics for algorithmic pricing in a market where firms aim to collude under secret price cuts and can acquire information about market demand. Information is provided either before price setting --- i.e., ex ante information provision --- or after price setting --- i.e., ex post information provision. The two modes of information provision generate a trade-off between a price sophistication effect and a profit dissipation effect. Such trade-off hinges upon different factors, namely, the heterogeneity of demand, the efficiency of the information technology, and the number of firms. Our analysis provides antitrust policy implications for the development of the theory of harm associated with algorithmically colluding firms.