TY  - JOUR
CY  - Chicago.
ID  - publications47835
UR  - http://tse-fr.eu/pub/128093
IS  - n° 5
A1  - Johnson, Justin Pappas
A1  - Rhodes, Andrew
A1  - Wildenbeest, Matthijs
N2  - We investigate the ability of a platform to design its marketplace to promote competition, improve consumer surplus, and increase its own payoff. We consider demand‐steering rules that reward firms that cut prices with additional exposure to consumers. We examine the impact of these rules both in theory and by using simulations with artificial intelligence pricing algorithms (specifically Q‐learning algorithms, which are commonly used in computer science). Our theoretical results indicate that these policies (which require little information to implement) can have strongly beneficial effects, even when sellers are infinitely patient and seek to collude. Similarly, our simulations suggest that platform design can benefit consumers and the platform, but that achieving these gains may require policies that condition on past behavior and treat sellers in a nonneutral fashion. These more sophisticated policies disrupt the ability of algorithms to rotate demand and split industry profits, leading to low prices.
VL  - vol. 91
TI  - Platform design when sellers use pricing algorithms
AV  - none
EP  - 1879
Y1  - 2023/09//
PB  - Econometric Society, the University of Chicago
JF  - Econometrica
SN  - 1468-0262
SP  - 1841
ER  -