When the Model Is the Market

Most people consider AI to be chatbots or image generation. But in reality modern AI is a complicated, layered system. The real power is at the bottom. The model layer itself. In this episode, EconWorks breaks down the AI stack (Model → System → Interface) and explains why whoever controls the model layer (the base of the stack) is the one that controls the entire market. You’ll learn how scale, learning effects, and scope economies concentrate advantage at the model layer; why the market has transitioned from open research to centralized platforms; and the two competing visions of AI: shared infrastructure vs. controlled platforms. It also considers what the model means for competition, why governance is now the critical issue, and how the same system that fuels innovation can also lead to lock-in and dependence.Read the full article and graphic analysis: https://blog.econworks.com/p/control-in-ai-episode-4-when-the?r=562wriExplore more visual economics content: https://econworks.comYouTube: https://www.youtube.com/@EconWorks-d3eSubstack: https://blog.econworks.com This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit blog.econworks.com/subscribe