Flattening Supply Chains: When do Technology Improvements lead to Disintermediation?

Understand

In the digital economy, technological innovations make it cheaper to produce high-quality content.

• For example, generative AI tools reduce costs for creators who develop content to be distributed online, but can also reduce production costs for the users who consume that content.
• These innovations can thus lead to disintermediation, since consumers may choose to use these technologies directly, bypassing intermediaries.
• To investigate when technological improvements lead to disintermediation, we study a game with an intermediary, suppliers of a production technology, and consumers.