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When does Learning by Doing generate current losses?

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Author Info

  • Francisco Alvarez

    ()
    (Departamento de Análisis Económico II, Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Somosaguas, Madrid, Spain Departamento de Análisis Económico I, Universidad Complutense de Madrid, Spain)

  • Emilio Cerdá

    ()
    (Departamento de Análisis Económico II, Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Somosaguas, Madrid, Spain Departamento de Análisis Económico I, Universidad Complutense de Madrid, Spain)

Abstract

We study under which conditions a learning by doing effect in the industry causes a monopolist to operate at a loss for some initial periods. Those conditions involve a parameter of the learning process, the slope of inverse demand function and the discount parameter. In order to get results, we explore the analytical solution to a T-period learning by doing model, which is also a novelty. Numerical examples are presented.

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Bibliographic Info

Article provided by Springer in its journal Spanish Economic Review.

Volume (Year): 3 (2001)
Issue (Month): 1 ()
Pages: 55-69

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Handle: RePEc:spr:specre:v:3:y:2001:i:1:p:55-69

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Related research

Keywords: Learning by Doing; monopoly; industrial organization; dynamic programming;

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Cited by:
  1. Alvarez, F. & Cerda, E., 2003. "Learning by doing in a T-period production planning: Analytical solution," European Journal of Operational Research, Elsevier, vol. 150(2), pages 353-369, October.

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