Smarter AI Cuts Work Costs, But Coordinated AI Changes Returns to Scale
pdamodaran · x · 2026-11-08
The author offers a take on how AI reshapes economies of scale: smarter AI makes firms more productive, but well-coordinated AI could make them unbeatable. The core insight: intelligence lowers the cost of doing work, while coordination changes the returns to scale — once each new agent makes the others more productive, growing bigger also means getting cheaper, a fundamentally different growth dynamic from past software scaling.
Related event: Intelligence Cuts Work Costs, Coordination Rewrites AI Firm Economics(2 posts)→
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