Skip to Content
Uncategorized

Best of 2012: Cartels Are an Emergent Phenomenon, Say Complexity Theorists

In January, theorist revealed that under certain market conditions, cartels arise naturally without collusion.

“The price of gas is a puzzle. Monitor the average price in gas stations in a particular city and it will vary dramatically, sometimes in a matter of hours and often in ways that appear cyclical. 

Economist have long scratched their heads over this kind of pattern. One explanation is that this behaviour emerges when two competing companies change their pricing strategy at each stage by reacting to the other. The resulting behaviours are known as Edgeworth Price Cycles.

The problem is that gas station prices are not controlled by two competing players but many competing retailers. It’s easy to assume that the many-body problem produces similar patterns but nobody has been able to show this. 

Until now. Today Tiago Peixoto and Stefan Bornholdt, physicists at the University of Bremen in Germany, show how a more complicated model with many buyers and sellers reproduces this kind of behaviour. 

But it also goes further. Peixoto and Bornholdt say that when condition are right, cartel-like behaviour emerges naturally without collusion between sellers.    

Continued…

Keep Reading

Most Popular

How Rust went from a side project to the world’s most-loved programming language

For decades, coders wrote critical systems in C and C++. Now they turn to Rust.

The inside story of how ChatGPT was built from the people who made it

Exclusive conversations that take us behind the scenes of a cultural phenomenon.

Design thinking was supposed to fix the world. Where did it go wrong?

An approach that promised to democratize design may have done the opposite.

Sam Altman invested $180 million into a company trying to delay death

Can anti-aging breakthroughs add 10 healthy years to the human life span? The CEO of OpenAI is paying to find out.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at customer-service@technologyreview.com with a list of newsletters you’d like to receive.