AI automation shifts scarcity costs depending on spending patterns
Abundance Is an Expenditure Condition: AI Automation, Scarcity Rents, and Access
Computational Engineering, Finance, and ScienceComputer Science and Game Theory
Summary
When AI and automation make products cheap to reproduce, it’s unclear if the value linked to scarce resources goes away or just moves elsewhere. The authors show that even if a product’s price falls, scarcity costs don’t necessarily disappear because people might spend more in other ways. How much value stays tied up in scarce resources depends on how much people want more of an automated good and who owns scarce assets. This means having very low production costs alone doesn’t guarantee everything becomes freely accessible.
What this means in practice
- •For economic policy makers: Use the condition relating expenditure and ownership structure to predict if automation reduces or redistributes scarcity rents in real economies.
- •For supply chain analysts: Assess which scarce inputs will retain economic value despite automation reducing marginal production costs, guiding resource allocation strategies.
A theory result. No direct application yet.
Authors
Song Zichen
Abstract
If AI and automation make reproducible goods cheap, do scarcity rents disappear or migrate? We give a closed general-equilibrium answer that separates a low unit price from economic abundance. Agents consume an automated good, a fixed-supply good, and a numeraire; their purchasing power comes from resource endowments and ownership of scarce assets. The equilibrium of a heterogeneous economy exists, is unique, and is globally stable. Aggregate scarcity rent obeys an exact accounting identity: it rises with automation if and only if real expenditure on the automated good falls. In a symmetric economy this sign is determined by whether the curvature of marginal utility is above or below one. Thus marginal cost converging to zero is insufficient: demand rebound can absorb the released resources. After automated demand is fixed or sufficiently satiated, each agent's access share is an exact convex combination of net purchasing-power and scarce-asset ownership shares. This yields a concentration decomposition with a covariance term, showing why equalizing one asset can increase access inequality when ownership sources were offsetting. A compute extension distinguishes a fixed productive input, whose rent can vanish, from a binding throughput constraint, whose rent persists. Numerical experiments reproduce the sign reversals, ownership effects, and institutional frontiers, and imply eight falsifiable restrictions. The results replace a binary ``post-scarcity'' claim with a testable condition on expenditure, capacity, and ownership.