The ODA Section invites you to a seminar where A-Sung Hong will give the following presentation:

AI Platforms and Value Capture: Release of Deep-Learning Platforms and AI Tech Firms' Profitability

Abstract
AI platforms are critical infrastructures that accelerate modern AI innovation by providing shared access to powerful foundational technologies. However, while these platforms clearly facilitate rapid AI innovation, we show that their introduction can significantly reduce the profitability of AI technology firms by reshaping industry dynamics and making industries more competitive over time. Leveraging the release of deep-learning AI platforms around 2016 within a difference-in-differences framework, we find that AI-patenting firms experienced a significant decline in profitability compared to non-AI patenting firms. This decline was primarily driven by industry-level shifts toward greater competitiveness, including increased product similarity, new market entry, and declining concentration (industry fragmentation). Our findings highlight the dual nature of AI platforms: they accelerate technological advancement while simultaneously eroding firms’ ability to protect their returns, as intensified industry competition ultimately compresses profit margins.

* The earlier version of this paper was presented in the previous SIM seminar. 

Everyone is welcome!