Adopters

The adopters are the ordinary firms that buy and use AI, from banks and hospitals to shops and law practices. When AI cuts a firm's costs, the saving can go three ways: to the firm as profit, to its customers as lower prices, or to its workers as higher pay. David Ricardo, an English economist who asked in 1817 why landlords grew rich when bread grew dear, found that the owner of the scarcest input collects a rent: profit above what it takes to keep a business going, earned because something holds rivals off. William Nordhaus, an economist who measured how much of the value of new inventions their makers keep as profit, found that it is a small part and that competition passes most of it on as lower prices. This site judges that the same holds one step down: a firm that adopts AI keeps the saving only until its rivals adopt too, unless its prices are set by something other than its costs. For a layer of buyers, the direction word describes the AI they buy: commoditising means that input is getting cheaper and more alike from seller to seller, so its gains pass to the adopters, unless competition among them passes the gains on again to their own customers.

Getting cheap and interchangeable

This site judges that AI itself is becoming a commodity to the adopting firm: the same tools are sold to it and to its rivals, and their price keeps falling. David Teece, an economist who studied why the firm that invents something often fails to keep the returns, found that generic inputs anyone can buy earn only an ordinary return; on his account a firm's advantage from AI lasts only as long as its rivals are slower to adopt it.

Staying scarce

This site judges that what stays scarce, for the adopter, is the skill to rebuild its work around AI rather than add AI to old work, and its own records of how that work is done. Hamilton Helmer, a strategy consultant who studied why some firms keep earning more than their investors could expect elsewhere, found that a lasting advantage is a benefit behind a barrier; process power, a way of working that takes rivals years to learn, is the one that could fit an early adopter, but this site cannot yet see it in any reading.

What would make it last

Early adopters rebuild their operations around AI in ways rivals take years to copy, process power in Helmer's sense; or they hold prices that are set by something other than their own costs, such as a share of what the client spends or a fee a regulator sets, so the saving stays with them. Ronald Coase, an economist who studied why some work is done inside firms rather than bought, would add that cheaper checking and contracting could also move work out of firms to AI-run suppliers, handing the saving to whoever runs them.

What would prove this wrong

Firms that adopt AI earning higher profits than rivals that do not for years after the tools became widely available, in trades where prices are set by competition; or the share of firms reporting a measurable payoff jumping as use spreads.

Binds on (how tight)

Applications (no reading; a model judges it probably slack), Deployment platforms (no reading; a model judges it probably easing), Tests and evaluations (no reading; a model judges it probably moderate)

The rival view

Adoption is not slow; it is hard to see