Project description
Analysing competition in dynamic markets with asymmetric information
The ERC-funded DynamicInfoAsym project aims to gain insight into dynamic markets by examining information transmission by strategic agents and algorithms. Its primary objective is to analyse competition in dynamic markets with asymmetric information, taking into account both positive and normative analysis. To do so, the project will first develop a strategic workhorse model that allows for thorough assessment of policy impact and regulatory decisions on consumer welfare and market efficiency. It will apply the model to investigate decisions made by strategic agents and those made by algorithms across different markets, and draw comparisons. Finally, it will assess how the resulting insights can inform policy debates on regulation, particularly within the framework of the EU AI Act.
Objective
This proposal aims to advance our understanding of information transmission in dynamic markets by examining two specific scenarios: (i) information transmission by strategic agents and (ii) information transmission by algorithms. Its core focus revolves around the analysis of competition in dynamic markets with asymmetric information. The proposal encompasses both positive and normative analyses, offering insights into the ongoing discourse on predatory and algorithmic pricing.
The project comprises three ambitious tasks:
The first part develops a state-of-the-art theoretical workhorse model. Unlike the previous literature, it does not follow the “reputation” approach, which assumes the existence of a type committed to playing specific behavior. Instead, it adopts a fully strategic model, which, in turn, enables a thorough examination of the impact of policy and regulatory decisions on consumer welfare or market efficiency in a variety of markets since the equilibrium predictions do not depend on the endogenously specified behavioral types.
The second part showcases the applications of the tools developed in Part 1 across different environments and how the resulting insights can inform policy debates on regulation. When applied to dynamic limit pricing, the model reveals a novel tradeoff: strategic delay. Entrants may opt to delay their entry decisions to gather more information about market conditions, which potentially could lead to a decrease in consumer welfare. This suggests that antitrust policies should also consider strategic delay, rather than solely focusing on the occurrence of entry when deciding whether limit pricing negatively affects consumers or not.
The final part of the project examines decisions made by algorithms rather than strategic agents and draws comparisons with Part 2. This part holds the potential to contribute significantly to the regulation of Artificial Intelligence, particularly within the framework of the EU AI Act.
Fields of science (EuroSciVoc)
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
CORDIS classifies projects with EuroSciVoc, a multilingual taxonomy of fields of science, through a semi-automatic process based on NLP techniques. See: The European Science Vocabulary.
This project has not yet been classified with EuroSciVoc.
Be the first one to suggest relevant scientific fields and help us improve our classification service
You need to log in or register to use this function
Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
-
HORIZON.1.1 - European Research Council (ERC)
MAIN PROGRAMME
See all projects funded under this programme
Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
HORIZON-ERC - HORIZON ERC Grants
See all projects funded under this funding scheme
Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2024-STG
See all projects funded under this callHost institution
Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
00198 Roma
Italy
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.