AI Agents: Economics of Market Design Transformation

This is an excerpt from a National Bureau of Economic Research (NBER) Working Paper authored by multiple researchers, examining the economic implications of the rise of AI agents in digital markets. Titled "The Coasean Singularity? Demand, Supply, and Market Design with AI Agents," the paper investigates how these autonomous systems, which act on behalf of humans, will dramatically reduce transaction costs and reshape the economy. The authors analyze the factors driving demand for AI agents (derived from the trade-off between decision quality and effort reduction) and the dynamics governing supply (including the shift from human to scalable AI agent production and complex pricing models). Furthermore, the paper considers the equilibrium effects of agents on existing market structures, suggesting they could reduce rents but also increase price dispersion through sophisticated obfuscation tactics, while also detailing how agents can enable previously impractical market designs that rely on complex preference elicitation. Finally, the text explores regulatory challenges related to market power, liability, and privacy that must be addressed for a successful transition to an agent-mediated economy.