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Generative AI competition limits provider pricing power, NBER paper finds

By PulseAugur Editorial · [1 sources] ·

A new working paper from the National Bureau of Economic Research suggests that competition in the generative artificial intelligence market is leading to increased price sensitivity among consumers. The research indicates that consumers view various AI services as close substitutes and have weaker preferences for specific providers compared to AI in general. This growing substitutability is expected to limit providers' pricing power and allow consumers to benefit from the surplus generated by these services, potentially constraining profit margins for AI companies. AI

IMPACT Increased competition and consumer price sensitivity in generative AI could lead to lower prices and greater consumer surplus, potentially impacting AI companies' profitability.

RANK_REASON The cluster contains a working paper from a research institution. [lever_c_demoted from research: ic=1 ai=1.0]

Read on Mastodon — fosstodon.org →

AI-generated summary · Google Gemini · from 1 sources. How we write summaries →

Generative AI competition limits provider pricing power, NBER paper finds

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17 / 100
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The cluster contains a working paper from a research institution. [lever_c_demoted from research: ic=1 ai=1.0]
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COVERAGE [1]

  1. Mastodon — fosstodon.org TIER_1 English(EN) · [email protected] ·

    Competition in Generative AI: Evidence from Consumer Demand https://www. nber.org/papers/w35953 "... Consumers are highly price sensitive, have much weaker pref

    Competition in Generative AI: Evidence from Consumer Demand https://www. nber.org/papers/w35953 "... Consumers are highly price sensitive, have much weaker preferences for particular providers than for AI overall, and view AI services as increasingly close substitutes. Our result…

    LINKS nber.org/…/w35953

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