The Price of Intelligence: How Should Socially-minded Firms Price and Deploy AI?

Nils H. Lehr and Pascual Restrepo

No 34424, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Leading AI firms claim to prioritize social welfare. How should firms with a social mandate price and deploy AI? We derive pricing formulas that depart from profit maximization by incorporating incentives to improve welfare and reduce labor disruptions. Using US data, we evaluate several scenarios. A welfarist firm that values both profit and welfare should price closer to marginal cost, as efficiency gains outweigh distributional concerns. A conservative firm focused on labor-market stability should price above the profit-maximizing level in the short run, especially when its AI may displace low-income workers. Overall, socially minded firms face a trade-off between expanding access to AI and the resulting loss in profits and labor market risks.

JEL-codes: E0 H0 J0 (search for similar items in EconPapers)
Date: 2025-10
New Economics Papers: this item is included in nep-ain, nep-bec and nep-lab
Note: EFG LS PE
References: Add references at CitEc
Citations:

Published as Nils H. Lehr & Pascual Restrepo, 2026. "The price of intelligence: How should socially-minded firms price and deploy AI?," Journal of Monetary Economics, vol 157.

Downloads: (external link)
http://www.nber.org/papers/w34424.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:34424

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34424
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().