This essay argues that the economics of context engineering expose a gap in the Brynjolfsson-Hitzig framework that changes its practical implications: for how enterprises build with AI, which firms centralize successfully, and whether the AI economy will be as centralized as their framework suggests. It explores how the cost and effort required to make knowledge usable by AI—context engineering—creates a bottleneck that prevents complete centralization, preserving the importance of local knowledge and human judgment. The article discusses the implications for SaaS companies, knowledge workers, and the future of work in an AI-driven economy, predicting that those who invest in context engineering capabilities will see the highest ROI.
