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Equity: AI and Agribusiness in the EU

Big Data, interconnections and algorithms are replacing the free flow of goods with the free flow of knowledge and multiply our capacity for analysis and understanding. It is therefore possible to permanently monitor exchanges to detect flaws and drifts, and to manage and to manage flows through increasingly powerful software. The inevitable digitization of the world will bring difficulties because it will be necessary to adapt to it, to have the tools required to act and to have the will to move forward.

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In its report entitled ‘Shaping Europe’s Digital Future‘, the EU Commission presents its digital strategy. Digital solutions such as communication systems, artificial intelligence (AI) or quantum technologies can enrich our lives in many ways. The Commission wants “a smooth single market, where companies, whatever their size or sector, can compete with each other compete on a level playing field and can develop, market and use technologies, products and services on a scale that boosts their productivity and global competitiveness, and competitiveness on a global scale, and where consumers can be confident that their rights are respected”.

AI and the European Union

In March 2020 Thierry Breton, European Commissioner for Internal Market, presented “a new industrial strategy [that] will contribute to three key priorities: preserving the global competitiveness of European industry and a level playing field, both at home and abroad, making Europe climate neutral by 2050, and shaping Europe’s digital future. Commissioner Breton’s proposal will encounter the limits of European law, where competition policy takes precedence. The European Union is the only entity where competition rules have a quasi-constitutional status. This primacy resides in part in the texts, such as the Treaty on the Functioning of the European Union or the Merger Regulation. There is a particularity in European law that establishes the primacy of competition law over all other Union policies except those of equal rank, such as the Common Agricultural Policy.

It is important that competition rules remain in touch with a rapidly changing, increasingly digital world. In a digital world without borders, a handful of companies with the largest market share are capturing most of the profits from the value created in a data-driven economy.

Margrethe Vestager, Commissioner for Competition, insisted that competition law is the right tool to ensure the best prices for consumers and stimulate innovation. Commissioner Vestager has launched a reflection on the right definition of the relevant market in the digital world, where the notion of price is not the same. Indeed, a supposedly free online service is, in reality, monetized by capturing and marketing user data.

In April 2020, the European Commission announced its draft regulation and actions “for excellence and trust in AI.” The draft regulation aims to distinguish between “beneficial” AI systems and those that could cause problems in the future. The European Union would therefore like to ban them and would aim to put in place drastic rules.

AI and dynamic pricing

In recent years, artificial intelligence has enabled pricing solutions to track buying trends and determine more competitive product prices. While static pricing maintains absolute prices, dynamic pricing adjusts prices to offer customers different prices based on external factors, their individual buying patterns and data analytics aggregate data. Dynamic pricing is a pricing method that existed before algorithms.

In recent years, AI has enabled pricing solutions to track buying trends and determine more competitive product prices. While static pricing maintains absolute prices, dynamic pricing adjusts prices to offer customers different prices based on external factors, their individual buying patterns and data analytics aggregate data. Dynamic pricing is a pricing method that existed before algorithms.

Let’s recall that on restaurant menus, the market price is written instead of a specific price, which means the price of the dish depends on the market price of the ingredients, and the price is available on demand, and is particularly used for seafood, including lobsters and oysters.

Automatic dynamic pricing software is still in its infancy. Econometric science coupled with predictive AI helps companies determine the best price for their products and make sales promotion decisions. These applications claim to be able to calculate the loss of sales volume, as well as the revenue or market share of a product when the same company launches a new product. They would also determine the potential change in demand for the product when the price of another product changes, as well as the competition.

For almost 20 years, the merger of companies among distributors has had a strong influence on all sectors. For example, in the wine industry, there were as many as 1,800 wineries and 3,000 wholesalers in the United States in 1995. In 2018, there were nearly 9200 wineries, compared to only 1200 wholesalers. This merger phenomenon has occurred in many industries. Smaller companies are merging with larger companies in an effort to generate a higher margin, gain access to more resources, and be able to compete for a larger market share.

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The critique of homo economicus makes sense in the commercial relationships between actors. “Where is the train station?” asks one individual. “And could you mail this letter for me on the way?” asks the second. “Yes,” says the first, determined to open the envelope and see if it contains anything valuable. Through the excerpt from his article ‘Rational Fools‘, Amartya Sen summarizes certain relationships between economic actors

Artificial intelligence is the antithesis of the imagination conveyed by farmers. Nevertheless, it seems necessary to implement the next digital pricing tools coupled with AI with the objective not to maximize the profit of this or that economic agent but to ensure fairness, from the producer to the consumer.