The Coasean Singularity? Demand, Supply, and Market Design with AI Agents

This paper examines how autonomous AI agents are poised to revolutionize digital economies by drastically lowering transaction costs and acting as intermediaries for human users. These systems are shifting from simple information retrieval to independent reasoning and action, performing complex tasks like negotiation, product search, and contract management. While this transition offers significant efficiency gains and enables superior market designs, it also introduces complications such as price obfuscation and digital identity verification challenges. The authors categorize the supply of these agents by their ownership and specialization, weighing the benefits of user-controlled tools against those integrated into specific platforms. Ultimately, the widespread adoption of AI agents will necessitate new regulatory frameworks to manage market power, liability, and data privacy in an increasingly automated world. Integration of these agents could move markets closer to competitive ideals, provided that designers successfully solve the critical problem of aligning agent actions with human preferences.