Why Do Gas Station Prices Constantly Change? Blame the Algorithm Retailers are using artificial-intelligence software to set optimal prices, testing textbook theories of competition; antitrust officials worry such systems raise prices for consumers The Knaap Tankstation gas station in Rotterdam, Netherlands, uses a2i Systems artificial-intelligence pricing software. Photo: Knaap Tankstation BV By Sam Schechner Updated May 8, 2017 6:41 p.m. ET ROTTERDAM, the NetherlandsOne recent afternoon at a Shell-branded station on the outskirts of this Dutch city, the price of a gallon of unleaded gas started ticking higher, rising more than 3 cents by closing time. A little later, a competing station 3 miles down the road raised its price about the same amount. The two stations are among thousands of companies that use artificial-intelligence software to set prices. In doing so, they are testing a fundamental precept of the market economy. In economics textbooks, open competition between companies selling a similar product, like gasoline, tends to push prices lower. These kinds of algorithms determine the optimal price sometimes dozens of times a day. As they get better at predicting what competitors are charging and what consumers are willing to pay, there are signs they sometimes end up boosting prices?

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Gas station prices constantly change due to the use of artificialintelligence software by retailers to set optimal prices These algorithms analyze var... View the full answer