Most analysis of the impact of AI ignore that (1) it's driven by the specifics of supply and demand in each market, and (2) it can vary as well between different types of market participants. This page is a toy model of the impact of AI on the price/quality equilibrium of different types of simplified markets. Try out different combinations to get a first intuition of what matters and how. For the article this is based on see Relative superintelligence and competitive dynamics. (Caveat 1: Early beta version. Caveat 2: It's a conceptual model to play and think with, not meant to be simulator.)
- Products vary by information density. Think of it as "the aspect of quality that can be improved by AI."
- AI can change the relationship between production cost and information density in different ways.
- Markets can reward information quality but sometimes only up to a cap.
Demand
how much the market pays as products get more complex
Cost vs complexity
unit cost as products get more complex
Cost vs volume
unit cost as production volume grows
Equilibrium shifts
Market equilibriums before and after AI
Highest rewarded complexity by producer type
quantity sold at each level of complexity