When Collusion Cuts Prices: The Counterintuitive Economics of Algorithmic Bidding
TL;DR for operators Marketplace operators usually worry that pricing algorithms learn the oldest trick in commerce: stop undercutting each other and raise prices. That worry is real. But this paper makes a more interesting point: when sellers use algorithms to optimise both product prices and sponsored-ad bids, collusion can move through the cost side before it moves through the price side.1 ...