AI Business LensTHE BUSINESS OF AI, FOR PEOPLE WHO TEACH IT OR LEARN FROM IT
NBER Working Papers · October 26, 2026 · On the brief until November 9, 2026

Competition in Generative AI: Evidence from Consumer Demand -- by Mark L. Egan, Dominic Russel, Claire Shi, Vincent Yao

EconomicsMarketing
THE AI ANGLE
Competing as an easily substituted consumer subscription product

An NBER study analyzed card transactions for 174 million consumers and found that 2.9 percent paid for generative AI services. Users switch tools easily, especially after new model releases, and view competing platforms as close substitutes. This high price sensitivity limits pricing power for software firms and leaves most economic surplus with consumers.

Summary written by AI Business Lens with an AI model from the article at nber.org. It is not the article, and the publisher has not reviewed it. For publishers.

THE TEACHING ANGLE
Annual retention rates between 20 and 45 percent raise questions about whether AI firms can build brand loyalty without sharper product differentiation.

Read the original at nber.org   Generate teaching or study materials

Instructors get discussion guides, assignments, and mini-cases. Students and readers get a plain summary, points to raise, an exercise, and a self-check. All built from the full article. A free account saves stories and gives you three generations. Stories stay on the brief for 14 days. After that this page keeps the link to the original.

More in Economics