Click here for the entire paper. Excerpt:
“The broad adoption of AI agents will cause transformative downstream effects on the economy.
Although the exact nature of these changes remains uncertain, the forces at play are familiar to
economists: supply and demand of AI agents will continue to shape market organization, while
technological change alters the relative costs of different activities. To see how these forces might
operate, Coase’s (1937) insight that transaction costs play a central role in shaping organizations is
particularly useful. One could argue that much of how we structure our economy and firms can be
explained by transaction costs, often costs of human labor. The activities that comprise transaction costs—learning prices, negotiating terms, writing contracts, and monitoring compliance—are
precisely the types of tasks that AI agents can potentially perform at very low marginal cost. Once
agents can indeed execute these functions effectively and cheaply, we will see significant shifts in
the traditional make-or-buy boundaries that define firm organization and market structure.”
Here is a table from the paper:
Click here to read about Ronald H. Coase. “Ronald Coase received the Nobel Prize in 1991 “for his discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.””
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