AI might make it cheaper to start a company, but it’s actually going to lead to more monopolies, not more competition.
March 26, 2026
Original Paper
The Economics of Builder Saturation in Digital Markets
arXiv · 2603.23685
The Takeaway
We usually assume that lowering the cost of entry makes markets more democratic and diverse. This paper shows that when production costs hit near-zero, the bottleneck shifts to human attention, which is finite, inevitably creating a 'winner-take-most' dynamic where a few superstars dominate even more than before.
From the abstract
Recent advances in generative AI systems have dramatically reduced the cost of digital production, fueling narratives that widespread participation in software creation will yield a proliferation of viable companies. This paper challenges that assumption. We introduce the Builder Saturation Effect, formalizing a model in which production scales elastically but human attention remains finite. In markets with near-zero marginal costs and free entry, increases in the number of producers dilute aver