Modeling the Economic Impacts of AI Openness Regulation

Regulatory frameworks, such as the EU AI Act, encourage openness of general-purpose AI models by offering legal exemptions for open-source models. Despite this legislative attention on openness, the definition of open-source foundation models remains ambiguous. This paper presents a stylized model of the regulator's choice of an open-source definition in order to evaluate which standards will establish appropriate economic incentives for developers.