Document Type

Article

Publication Date

Fall 2023

Abstract

Antitrust scholars have widely debated the paradox of Amazon seemingly wielding monopoly power while charging low prices to consumers. A single company's behavior thereby helped spark a vibrant intellectual conversation as scholars debated why Amazon's prices were so low, whether enforcers should intervene, and, eventually, how the field of antitrust should be reformed. One of the main sources of agreement in these and other scholarly conversations has long been that Amazon charges low prices. This Article challenges that assumption by demonstrating that Amazon customers may pay significantly higher prices than is commonly understood due to strategies that do not necessarily depend on monopoly power. More importantly, unraveling the disconnect between perception and reality yields broader insights. One of the reasons why perceptions of Amazon's pricing have remained disconnected from reality is that conversations about regulating Amazon have paid inadequate attention to behavioral economics. Behavioral economics reveals how the company leverages its sophisticated algorithms, large datasets, and dark patterns to build a marketplace of consumer misperception by, for instance, making it difficult for consumers to find the low-priced items. Such practices undermine the goals of competition, in the economic sense of the word. But these practices have traditionally been the focus of consumer law rather than antitrust. Indeed, the longstanding inattention to these consumer law-related behavioral pricing practices raises the question of whether scholars have been incorrectly describing Amazon's prices as low. Amazon may offer many products at low, competitive prices, but by exploiting consumers' behavioral biases, Amazon may prevent a substantial number of consumers from finding those low prices. Thus, a behavioral consumer lens is necessary to see that what was originally framed as an antitrust paradox is better viewed as a more general pricing paradox. A company perceived as offering low prices may have been instead manipulating consumers to pay more. To see the full set of concrete legal solutions for promoting competition in Amazon's marketplace and beyond, it is important to move consumer law out of antitrust's shadow. Consumer law interventions include mandating information disclosures by Amazon to empower artificially intelligent digital intermediaries that could help lower consumers' search costs. Lawsuits based in unfair or deceptive acts or practices are also possible. Consumer law and antitrust law operating at full force offer the best chance for ushering in an era of "open retail" in which digital markets remain competitive and adequately serve consumers.

Download

Share

COinS