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Can the Nexus of Scaling Laws Coupled with Constant or Variable Elasticity of Substitution Predict AI and Other Technology Adoption?

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  • Rajesh P. Narayanan
  • R. Kelley Pace

Abstract

Emergent technologies such as solar power, electric vehicles, and artificial intelligence (AI) often exhibit exponential or power function price declines and various ``S-curves'' of adoption. We show that under CES and VES utility, such price and adoption curves are functionally linked. When price declines follow Moore's, Wright's and AI scaling "Laws,'' the S-curve of adoption is Logistic or Log-Logistic whose slope depends on the interaction between an experience parameter and the elasticity of substitution between the incumbent and emergent good. These functional relations can serve as a building block for more complex models and guide empirical specifications of technology adoption.

Suggested Citation

  • Rajesh P. Narayanan & R. Kelley Pace, 2025. "Can the Nexus of Scaling Laws Coupled with Constant or Variable Elasticity of Substitution Predict AI and Other Technology Adoption?," Papers 2502.00909, arXiv.org.
    • Handle: RePEc:arx:papers:2502.00909
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    References listed on IDEAS

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    1. Frank M. Bass, 1969. "A New Product Growth for Model Consumer Durables," Management Science, INFORMS, vol. 15(5), pages 215-227, January.
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