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Quantum Economic Advantage

Francesco Bova, Avi Goldfarb and Roger G. Melko

No 29724, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A quantum computer exhibits a quantum advantage when it can perform a calculation that a classical computer is unable to complete. It follows that a company with a quantum computer would be a monopolist in the market for solving such a calculation if its only competitor was a company with a classical computer. Conversely, economic outcomes are unclear in settings where quantum computers do not exhibit a quantum advantage. We model a duopoly where a quantum computing company competes against a classical computing company. The model features an asymmetric variable cost structure between the two companies and the potential for an asymmetric fixed cost structure, where each firm can invest in scaling its hardware to expand its respective market. We find that even if: 1) the companies can complete identical calculations, and thus there is no quantum advantage, and 2) it is more expensive to scale the quantum computer, the quantum computing company can not only be more profitable but also invest more in market creation. The results suggest that quantum computers may not need to display a quantum advantage to be able to generate a quantum economic advantage for the companies that develop them.

JEL-codes: L63 M15 O3 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-cmp
Note: PR
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Published as Francesco Bova & Avi Goldfarb & Roger G. Melko, 2023. "Quantum Economic Advantage," Management Science, vol 69(2), pages 1116-1126.

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