The Economics of Model Collapse: Equilibrium, Welfare, and Optimal Provenance Subsidies in Synthetic Data Markets

Excerpt

arXiv:2605.20279v2 Announce Type: replace-cross Abstract: Generative artificial intelligence is rapidly transforming the supply side of training data: an increasing share of new tokens, images, and structured records is produced by previous-generation models rather than by human originators. Recursive training on such synthetic content induces a measurable and often irreversible loss of distributional fidelity, a phenomenon known as model collapse. We develop the first unified microeconomic theo