Some states are creating statewide regulations for artificial intelligence. Whether that is a good thing or not is debatable. The wisdom of AI regulations is not perhaps the issue. Everyone acknowledges there will be some regulation, at some point.
The issue is whether many different regulations and regimes is helpful or harmful.
By some accounts, State lawmakers across the US introduced nearly 700 AI-related bills in 2024, according to the Business Software Alliance. Of the bills that were introduced, 113 were ultimately enacted into law.
That process of creating separate rules in potentially 50 different jurisdictions, while perhaps well-intentioned, virtually always raises costs of suppliers, and almost inevitably costs to consumers.
The same sort of process applies in lots of industries.
National vs. Local Regulation and Consumer Prices |
Study | Key Findings |
Chambers & Collins (Mercatus Center), How Do Federal Regulations Affect Consumer Prices? | Found that a 10% increase in total regulations leads to a 0.687% increase in consumer prices. The study also highlighted that low-income households are disproportionately affected, as they spend a larger share of their income on heavily regulated goods. |
IFAC & BIAC Survey (2018), Patchwork Financial Regulation a $780 Billion Drag on the Economy | Estimated that fragmented financial regulations cost the global economy over $780 billion annually, equating to 5–10% of annual revenue turnover for financial institutions. Over half of the respondents indicated that resources were diverted from risk management due to the costs associated with diverging regulations. |
Mercatus Center Study, Regulatory Accumulation and Its Costs | Determined that regulatory accumulation has reduced the annual growth rate of the U.S. GDP by an average of 0.8%. The study also found that increased regulations disproportionately burden low-income households by raising the prices of basic goods such as food and utilities. |
Bergeaud & Raimbault (2017), An empirical analysis of the spatial variability of fuel prices in the United States | Identified that state-level policies and local socio-economic factors significantly influence fuel prices, leading to substantial variability across different regions. The study underscores the impact of local regulations on consumer prices. |
Li, Gordon & Netzer (2018), An Empirical Study of National vs. Local Pricing by Chain Stores Under Competition | Found that national pricing can be more profitable for firms in certain competitive environments, as it helps avoid intense local competition. However, the optimal pricing strategy varies depending on market conditions, indicating that uniform national pricing isn't always the most beneficial approach. |
Most observers would acknowledge that higher consumer prices are a result of the fragmented regulatory regimes in many industries.
Regulated Industry | State-Level Regulation Example | National Regulation (or Lack Thereof) | Impact on Consumers | Price Impact |
Artificial Intelligence (AI) | Data privacy, algorithmic fairness | California Consumer Privacy Act (CCPA) imposes strict AI and data-use limitations | Developers must customize products for each state's privacy laws; increased legal risk | Slower rollout of AI tools; higher costs passed on to users |
Automotive / EVs | Emission standards, sales mandates | California's zero-emission vehicle (ZEV) mandates; bans on gas car sales post-2035 | Auto makers must produce state-specific vehicle variants; complex distribution logistics | Higher car prices in ZEV states; reduced consumer choice |
Healthcare | Telemedicine, insurance coverage | States have unique rules on provider licensing and allowable services | Providers face barriers offering services across state lines; insurers must tailor plans by state | Unequal access to care; administrative costs increase insurance premiums |
Energy | Fuel formulations, renewable mandates | California requires special gasoline blends; some states mandate renewable quotas | Refineries must produce multiple blends; adds transportation and inventory costs | Higher fuel prices in regulated states; seasonal price swings |
Finance / FinTech | Lending rules, crypto regulation | New York's BitLicense for crypto firms; state usury laws | FinTechs must obtain licenses in each state; may avoid high-cost states like NY | Restricted availability of services; delays in access |
Employment / Labor | Minimum wage, gig worker classification | California’s AB5 reclassifies many gig workers as employees | National firms (Uber, Doordash) must operate under different employment models across states | Increased service fees; reduced flexibility in gig services |
Education / EdTech | Student data privacy, content standards | Illinois Student Online Personal Protection Act (SOPPA) imposes strong data privacy rules | EdTech firms must develop state-specific compliance features | Slower implementation of new tools; reduced access for smaller schools |
Food & Agriculture | Labeling, animal welfare | Massachusetts requires cage-free eggs; Vermont passed first GMO-labeling law | Food producers face higher costs from differing labeling/packaging and sourcing requirements | Higher food prices; limited product availability in some regions |
Construction / Housing | Building codes, zoning laws | Each state/city sets codes; California has stricter seismic/energy efficiency rules | Builders must redesign projects by region; national firms struggle to scale housing solutions | Higher housing costs; slower construction timelines |
Tobacco / Cannabis | Sales restrictions, taxation | States regulate sales age, THC limits, and advertising; some states prohibit sales | Multistate cannabis firms must customize operations for compliance; interstate transport often banned | Prices vary widely; consumers in prohibition states pay black-market premiums |
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