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The State of AI with Marc & Ben

The a16z Show

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Jevons Paradox and Software Industry Growth

The Jevons Paradox in economics explains that as technology makes the use of resources more efficient, the demand for that resource increases, leading to overall increased consumption. This paradox applies to the software industry as falling software development costs could result in a surge in demand for software capabilities. This increased demand would lead to higher prices for software companies due to the ability to offer more advanced products and services. A similar scenario can be observed in Hollywood where CGI was expected to decrease movie production costs but instead raised them due to higher audience expectations for visually stunning movies.

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