The rapid diffusion of Generative Artificial Intelligence (GenAI) into consumer-facing design platforms is changing how firms involve customers in New Product Development (NPD). Yet the marketing consequences of this change cannot be inferred from creativity gains alone. A system may improve the objective quality of an idea while simultaneously weakening the consumer’s sense of control, authorship, authenticity, and ownership over the resulting product. This conceptual article develops a dual-pathway framework explaining when GenAI-enabled co-creation strengthens or undermines consumer responses. The enabling pathway proposes that interfaces preserving directive control and meaningful consumer contribution increase perceived control and creative self-efficacy, which reinforce perceived authorship and psychological ownership. The displacement pathway proposes that excessive system decision authority dilutes perceived authorship and may reduce product authenticity, particularly for identity-relevant products. Psychological ownership and authenticity subsequently shape purchase intention, willingness to pay, advocacy, and continued participation. The framework predicts a non-linear relationship between GenAI decision authority and psychological ownership: assistance may add too little value, collaboration can preserve agency while expanding capability, and autonomous generation can displace the consumer from the creative act. Process transparency, consumer artificial intelligence literacy, customization depth, and product identity relevance are identified as boundary conditions. The article contributes to consumer co-creation, artificial intelligence in marketing, psychological ownership, and innovation research by shifting attention from whether GenAI improves output creativity to how the allocation of creative agency shapes market outcomes. A three-study validation program and actionable design principles are proposed for future empirical research.