How Cartels Really Work, Episode 1: What Makes Something a Cartel?

Two competitors can charge the same high price without forming a cartel. They might even learn not to compete too aggressively. So what does that mean in practice?

Imagine two gas stations across the street from each other.

Both have turned pricing over to AI.

The owners give their systems essentially the same instruction:

Maximize our profits. Obey the antitrust laws. Do not collude with competitors.

Then they let the AIs set prices.

A few weeks later, both stations are charging $4.50.

Did the AIs form a cartel?

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