AI and Market Concentration: A Student Perspective
Recently, a student, Saanvi Bajoria, reached out to us to review her paper on AI and market concentration. We found it interesting and decided to share it on our blog.
Read the full research paper by Saanvi Bajoria (PDF)
Does AI make it harder for smaller businesses to compete? In her paper, Does the use of AI technologies increase market concentration by favouring large firms over smaller competitors?, Saanvi Bajoria examines how AI adoption may affect competition between firms of different sizes.
The paper considers two competing effects. Large firms may benefit from proprietary data, computing infrastructure, specialist talent and the ability to spread development costs across larger operations. These advantages could reinforce existing market positions.
At the same time, cloud-based services, open-source models and AI-as-a-service can make some capabilities more accessible to smaller firms. The paper also notes barriers such as integration costs, skills shortages, security requirements and reliance on major technology platforms.
Its overall conclusion is conditional: AI does not have a uniform effect on market concentration. Outcomes depend on the industry, access to technology and skills, and the policy environment.
