De mechanismes van algoritmische collusie

De populariteit van zelflerende algoritmes heeft zorgen gewekt bij academici en mededingingstoezichthouders over het mogelijk prijsverhogende effect van algoritmes voor prijszetting. Experts waarschuwen dat zelflerende algoritmes stilzwijgend zouden kunnen samenspannen en hogere prijzen kunnen bewerkstelligen (colluderen). Aan de andere kant zijn er auteurs die stellen dat coördinatie zelfs voor algoritmes te complex is om zonder verboden informatie-uitwisseling te bereiken. Wij overbruggen het gat tussen theoretische zorgen en dit praktisch scepticisme. In dit artikel analyseren wij mechanismes die ervoor zorgen dat zelflerende algoritmes in een setting met concurrentie relatief hoge prijzen kunnen bereiken, met een onderscheid tussen vorming en stabiliteit van stilzwijgende samenspanning. We analyseren de praktische toepasbaarheid van deze mechanismes. Stabiliteit-bevorderende mechanismes kunnen vóórkomen, maar we vinden het minder aannemelijk dat ook de prijsverhogende mechanismes in de praktijk kunnen worden gerealiseerd, vanwege de aanzienlijke kosten van experimentatie met prijzen, die essentieel is voor deze mechanismes. We concluderen dat het gebruik van AI (Artifical Intelligence) voor prijszetting mechanismes biedt die het risico op algoritmische collusie verhogen, maar de praktische belemmeringen betekenen dat het risico op dit moment beperkt lijkt te zijn tot specifieke markten of samenloop van omstandigheden

Hospital Competition in the Netherlands:An Empirical Investigation

The Dutch government introduced managed competition to the health care sec- tor in 2006. In this regulatory framework insurers compete for enrollees and providers compete for contracts with insurers. The resulting contracts are de- termined by bargaining, which outcome depends on the relative position of the provider. In this paper, we compare how commonly used market power indi- cators predict bargaining outcomes. We combine 2013 transaction data with bilateral contract data. Our empirical models explain the relative dierences in hospitals' revenues while controlling for dierences in the complexity of patients. Four indicators are used: the logit competition index (LOCI), willingness-to-pay (WTP), Elzinga-Hogarty market share and a rule-of-thumb market share. We nd that WTP and LOCI perform best empirically

Internet Retailing as a Marketing Strategy

We analyze the incentives for incumbent bricks-and-mortar firms and new entrants to start an online retail channel in a differentiated goods market. To this end we set up a two-stage model where firms first decide whether or not to build the infrastructure necessary to start an online retail channel and then compete in prices using the channels they have opened up. Consumers trade-off the convenience of online shopping and the ease to compare prices, with online uncertainties. Without a threat of entry by a third pure online player we find that for most parameter constellations firms' dominant strategy is not to open an online retail channel as this cannibalizes too much on their conventional sales. As the cannibalization effect is not present for a pure Internet player, we show that these firms will start online retail channels under a much wider range of parameter constellations. The threat of entry may force incumbent bricks-and-mortar firms to deter entry by starting up an Internet retail channel themselves. We also show that a low cost of building up an online retail channel or online shopping conveniences may not be to the benefit of online shopping as the strategic interaction between firms may be such that no online retail channel is built when the circumstances seem to be more favourable

The Welfare Effects of Discrimination in Insurance

We study an insurance model characterized by a continuum of risk types, private information and a competitive supply side. We use the model to investigate the welfare effects of discrimination (also known as risk selection). We postulate that a test is available that determines whether an applicant's risk exceeds a treshold. Excluding the highest risks softens adverse selection, but constitutes a welfare loss for the high risks. In contrast to a lemons market intuition, we find that aggregate surplus decreases when risk aversion is high. When risk aversion is low however, discrimination increases aggregate surplus.insurance; adverse selection; risk selection; discrimination

De mechanismes van algoritmische collusie

De populariteit van zelflerende algoritmes heeft zorgen gewekt bij academici en mededingingstoezichthouders over het mogelijk prijsverhogende effect van algoritmes voor prijszetting. Experts waarschuwen dat zelflerende algoritmes stilzwijgend zouden kunnen samenspannen en hogere prijzen kunnen bewerkstelligen (colluderen). Aan de andere kant zijn er auteurs die stellen dat coördinatie zelfs voor algoritmes te complex is om zonder verboden informatie-uitwisseling te bereiken. Wij overbruggen het gat tussen theoretische zorgen en dit praktisch scepticisme. In dit artikel analyseren wij mechanismes die ervoor zorgen dat zelflerende algoritmes in een setting met concurrentie relatief hoge prijzen kunnen bereiken, met een onderscheid tussen vorming en stabiliteit van stilzwijgende samenspanning. We analyseren de praktische toepasbaarheid van deze mechanismes. Stabiliteit-bevorderende mechanismes kunnen vóórkomen, maar we vinden het minder aannemelijk dat ook de prijsverhogende mechanismes in de praktijk kunnen worden gerealiseerd, vanwege de aanzienlijke kosten van experimentatie met prijzen, die essentieel is voor deze mechanismes. We concluderen dat het gebruik van AI (Artifical Intelligence) voor prijszetting mechanismes biedt die het risico op algoritmische collusie verhogen, maar de praktische belemmeringen betekenen dat het risico op dit moment beperkt lijkt te zijn tot specifieke markten of samenloop van omstandigheden

Internet Retailing as a Marketing Strategy

We analyze the incentives for incumbent bricks-and-mortar firms and newentrants to start an online retail channel in a differentiated goods market. Tothis end we set up a two-stage model where firms first decide whether or notto build the infrastructure necessary to start an online retail channel and thencompete in prices using the channels they have opened up. Consumers trade-offthe convenience of online shopping and the ease to compare prices, with onlineuncertainties. Without a threat of entry by a third pure online player we findthat for most parameter constellations firms' dominant strategy is not to openan online retail channel as this cannibalizes too much on their conventionalsales. As the cannibalization effect is not present for a pure Internet player,we show that these firms will start online retail channels under a much widerrange of parameter constellations. The threat of entry may force incumbentbricks-and-mortar firms to deter entry by starting up an Internet retail channelthemselves. We also show that a low cost of building up an online retail channelor online shopping conveniences may not be to the benefit of online shoppingas the strategic interaction between firms may be such that no online retailchannel is built when the circumstances seem to be more favourable.E-Commerce; Internet; multichannel competition; online uncertainty; online shopping convenience

Electronic Commerce and Retail Channel Substitution

We analyze a market where firms compete in a conventional and an electronicretail channel. Consumers easily compare prices online, but some incur purchaseuncertainties on the online channel. We investigate the market shares of the two retailchannels and the prices that are charged. We find that the share of the electronic channelis decreasing in the size of the uncertainty. Furthermore, searching consumers do notalways buy. They drop out when the uncertainty associated with buying online is not offsetby a low price. Finally, the model exhibits price dispersion and the expected price isincreasing in the magnitude of the online purchase uncertainty.E-Commerce; Internet; duopoly pricing; consumer search; retail channel.

Regulating the new information intermediaries as gatekeepers of information diversity

Purpose - The purposes of this paper are to deal with the questions: because search engines, social networks and app-stores are often referred to as gatekeepers to diverse information access, what is the evidence to substantiate these gatekeeper concerns, and to what extent are existing regulatory solutions to control gatekeeper control suitable at all to address new diversity concerns? It will also map the different gatekeeper concerns about media diversity as evidenced in existing research before the background of network gatekeeping theory critically analyses some of the currently discussed regulatory approaches and develops the contours of a more user-centric approach towards approaching gatekeeper control and media diversity. Design/methodology/approach – This is a conceptual research work based on desk research into the relevant and communications science, economic and legal academic literature and the relevant laws and public policy documents. Based on the existing evidence as well as on applying the insights from network gatekeeping theory, this paper then critically reviews the existing legal/policy discourse and identifies elements for an alternative approach. Findings – This paper finds that when looking at search engines, social networks and app stores, many concerns about the influence of the new information intermediaries on media diversity have not so much their source in the control over critical resources or access to information, as the traditional gatekeepers do. Instead, the real bottleneck is access to the user, and the way the relationship between social network, search engine or app platforms and users is given form. Based on this observation, the paper concludes that regulatory initiatives in this area would need to pay more attention to the dynamic relationship between gatekeeper and gated. Research limitations/implications – Because this is a conceptual piece based on desk-research, meaning that our assumptions and conclusions have not been validated by own empirical research. Also, although the authors have conducted to their best knowledge the literature review as broad and as concise as possible, seeing the breadth of the issue and the diversity of research outlets, it cannot be excluded that we have overlooked one or the other publication. Practical implications – This paper makes a number of very concrete suggestions of how to approach potential challenges from the new information intermediaries to media diversity. Social implications – The societal implications of search engines, social networks and app stores for media diversity cannot be overestimated. And yet, it is the position of users, and their exposure to diverse information that is often neglected in the current dialogue. By drawing attention to the dynamic relationship between gatekeeper and gated, this paper highlights the importance of this relationship for diverse exposure to information. Originality/value – While there is currently much discussion about the possible challenges from search engines, social networks and app-stores for media diversity, a comprehensive overview in the scholarly literature on the evidence that actually exists is still lacking. And while most of the regulatory solutions still depart from a more pre-networked, static understanding of “gatekeeper”, we develop our analysis on the basis for a more dynamic approach that takes into account the fluid and interactive relationship between the roles of “gatekeepers” and “gated”. Seen from this perspective, the regulatory solutions discussed so far appear in a very different light