Can the Nexus of Scaling Laws Coupled with Constant or Variable Elasticity of Substitution Predict AI and Other Technology Adoption?

Rajesh P. Narayanan and R. Kelley Pace

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Abstract: Emergent technologies such as solar power, electric vehicles, and artificial intelligence (AI) often exhibit exponential or power function price declines and various ``S-curves'' of adoption. We show that under CES and VES utility, such price and adoption curves are functionally linked. When price declines follow Moore's, Wright's and AI scaling "Laws,'' the S-curve of adoption is Logistic or Log-Logistic whose slope depends on the interaction between an experience parameter and the elasticity of substitution between the incumbent and emergent good. These functional relations can serve as a building block for more complex models and guide empirical specifications of technology adoption.

Date: 2025-02
New Economics Papers: this item is included in nep-ain, nep-ene, nep-tid and nep-upt
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