Markets are competitive if and only if P != NP
4 hours ago
- #market competition
- #algorithmic collusion
- #computational complexity
- The paper argues that competitive markets depend on computational intractability: if P = NP, firms can efficiently detect collusion, making it sustainable; if P ≠ NP, detection is infeasible under certain conditions, preventing collusion stability.
- It links this to Maymin (2011), concluding that markets cannot be both informationally efficient and competitive, forming a fundamental trade-off.
- Artificial intelligence enhances firms' computational power, shifting markets toward collusion and explaining algorithmic collusion without explicit coordination.