Cheaper means more
reinforcing loop · 3 steps · Trace on the map →
The cycle
- Capability gets cheaperCapability price deflation
- Usage and new uses growWorkflow redesign
- Volume funds capacity and efficiencyCompute supply
What drives it
Falling prices open uses that were not worth it before, and the extra volume pays for more capacity and efficiency work.
What breaks it
Satya Nadella called it the Jevons paradox: as AI gets cheaper and more accessible, use rises faster. Power and chip supply cap how far volume can grow.
What to watch
Price per unit of fixed capability. Total tokens served.