Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/290195 
Year of Publication: 
2024
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2023: Growth and the "sociale Frage"
Version Description: 
This version: April 25, 2024
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
We examine the impact of self-learning Artificial Intelligence (AI) on firm competition in a growth model with endogenous labor supply and heterogeneous agents. AI possesses the ability to improve autonomously through application, testing, and training. When firms incorporate AI into their production processes, they incur variable costs for acquiring the necessary software as well as fixed costs for installing AI infrastructure. The latter indeed drive productivity increases and economic growth but can also serve as an entry barrier for competing firms. Therefore, we examine how the rise of AI affects market concentration, firm competition, firm productivity and income inequality. We discuss potential policy interventions such as a profit tax or the modernization of competition and merger laws to prevent a significant increase in market concentration and income inequality within AIintensive industries and to foster economic growth.
Subjects: 
Markups
Artificial Intelligence
Imperfect Competition
Competition Policy
Factor Income Shares
JEL: 
D21
L52
L11
L13
O33
Document Type: 
Conference Paper

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