A Formal Model of the Economic Impacts of AI Openness Regulation

Citation: Tori Qiu, Benjamin Laufer, Jon Kleinberg, Hoda Heidari A Formal Model of the Economic Impacts of AI Openness Regulation.
Internet Archive Scholar (search for fulltext): A Formal Model of the Economic Impacts of AI Openness Regulation
Wikidata (metadata): Q136001528
Download: https://arxiv.org/abs/2507.14193
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Summary

Authors build a formal economic model to analyze how AI openness regulations shape developer behavior and downstream innovation. In their framework, a developer (the generalist) chooses how open to make a model, while a regulator sets (1) an openness threshold, the minimum level required for a model to count as “open source,” and (2) a penalty, a cost imposed if the model falls short of that threshold. The model shows how these levers interact with the baseline strength of the model to determine equilibrium outcomes for openness and fine-tuning.

Theoretical and Practical Relevance

The paper’s contribution is analytic: it formalizes the idea that regulatory definitions of “open” and the costs of non-compliance matter differently across contexts. This clarifies how such levers could be studied, but it does not yet provide policy lessons, since the relative scaling of costs and benefits of openness is assumed rather than validated. For policy use, the framework would need empirical grounding to determine whether thresholds, penalties, or other mechanisms truly influence developer behavior at different capability levels.