Economic effects of AI
Introduction:
The growing phenomenon of AI has many economic applications which will keep
disrupting traditional business model and the economy the more developed it becomes. The
links and public debates concerning digital platforms and the risks related to the use of data
are proof of its potential and the growing place it has nowadays. We will focus on how AI
allows companies to become more competitive and the ramifications that have come and
might come because of such powerful tool. Therefore, the subject of our presentation will
deal with how AI economic effects can be measured and the new economic theories that
come with its development. The first part will be more business oriented with a benchmark
to outline the different uses of AI whereas the second part will focus on economic theories
and different approaches regarding this tool.
I)
AI is a tool with multiple practical uses
a) Professional uses already implemented in different business areas
Recommendation algorithm (Netflix, Spotify)
Price positioning (Uber)
Trends and visual modelling (using a picture to identify body size or
visualize how clothes would look on you) fast fashion (Shein)
Inventory and supply chain management (Amazon)
Forecasting (Salesforce)
b) R&D and possible future ramifications
Possible new uses and upgrades: customization, predictive analysis,
decision-making, automation, better chatbots (ChatGPT) etc.
Uncertainties: researching and developing AI means betting on the
future, externalities and side effects (job cuts, reshaping business
models, new jobs and qualifications arising etc.),
II)
Economic effects on competition
a) An asset leading to dominant position and winner-takes-all situation?
Creating monopolies?
New entry and exit barriers.
Abuses of dominance
b) Are regulations needed to make up for the unfairness of such tools?
Data regulations
Intellectual property and open source
Compensating externalities
Sources:
Prediction Machines: The Simple Economics of Artificial Intelligence, Ajay Agrawal, Joshua
Gans, Avi Goldfarb.
Economie des plateformes numériques : captation de la valeur, pouvoir de marché et
communs collaboratifs, El Yahyaoui, Yahya.
Management des systèmes d'information, Laudon, Kenneth ; Laudon, Jane.
Données et intelligence artificielle : le futur est en marche
Journal : Gestion - Revue internationale de gestion (HEC Montréal), 01 décembre 2022
OECD Business and Finance Outlook 2021 : AI in Business and Finance, OECD
AI adoption advances, but foundational barriers remain, McKinsey
AI Strict Liability Vis-à-Vis AI Monopolization, Columbia Science and Technology Law Review,
Vol. XXII, 2020