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The Learning Curve and Durable-Goods Production

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  • Atsuo Utaka

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    (Osaka University)

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    Abstract

    We investigate the effect of a learning curve on the production of durable goods by examining a durable-goods monopolist in a two-period model. If the monopolist faces a learning curve, the model shows that the equilibrium quantity of the first- (second-) period products will be smaller (larger) than if there were no learning curve. Consequently, in cases where the original production cost is sufficiently large, the presence of a learning curve drives down total profits.

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    File URL: http://www.accessecon.com/pubs/EB/2001/Volume12/EB-01L10004A.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 12 (2001)
    Issue (Month): 5 ()
    Pages: 1-8

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    Handle: RePEc:ebl:ecbull:eb-01l10004

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    1. Atsuo Utaka, 2000. "Planned obsolescence and marketing strategy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 339-344.
    2. Olsen, Trond E., 1992. "Durable goods monopoly, learning by doing and the Coase conjecture," European Economic Review, Elsevier, Elsevier, vol. 36(1), pages 157-177, January.
    3. Luis M.B. Cabral & Michael Riordan, 1992. "The Learning Curve, Market Dominance and Predatory Pricing," Papers, Boston University - Industry Studies Programme 0039, Boston University - Industry Studies Programme.
    4. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    5. Bulow, Jeremy I, 1982. "Durable-Goods Monopolists," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(2), pages 314-32, April.
    6. Michael Waldman, 1996. "Planned Obsolescence and the R&D Decision," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 583-595, Autumn.
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