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Learning and Forgetting: The Dynamics of Aircraft Production

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  • C. Lanier Benkard
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    Abstract

    This paper introduces a new cost dataset for a commercial aircraft firm and uses this data to analyze the dynamics of learning in commercial aircraft production. This dataset is found to be inconsistent with the simple learning hypothesis, and particularly the prediction that a firm's unit cost must decline with its cumulative production. Instead, strong support is found for the hypothesis of organizational forgetting, a more general learning model where unit costs are similarly dependent on a firm's past production experience, but where that experience depreciates over time. Additionally, it is found that some, but not all, of a firm's production experience transfers from one generation of an aircraft to the next. This evidence adds to our understanding of productivity in industries with learning and thus has implications to many fields of economics.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7127.

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    Date of creation: May 1999
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    Publication status: published as Benkard, C. Lanier. "Learning And Forgetting: The Dynamics Of Aircraft Production," American Economic Review, 2000, v90(4,Sep), 1034-1054.
    Handle: RePEc:nbr:nberwo:7127

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    1. Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195060119, October.
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    7. Norman Keith Womer, 1979. "Learning Curves, Production Rate, and Program Costs," Management Science, INFORMS, INFORMS, vol. 25(4), pages 312-319, April.
    8. Richard Baldwin & Paul Krugman, 1988. "Industrial Policy and International Competition in Wide-Bodied Jet Aircraft," NBER Chapters, in: Trade Policy Issues and Empirical Analysis, pages 45-78 National Bureau of Economic Research, Inc.
    9. Norman Keith Womer, 1984. "Estimating Learning Curves from Aggregate Monthly Data," Management Science, INFORMS, INFORMS, vol. 30(8), pages 982-992, August.
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    16. Martin B. Zimmerman, 1982. "Learning Effects and the Commercialization of New Energy Technologies: The Case of Nuclear Power," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 13(2), pages 297-310, Autumn.
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    Cited by:
    1. Jørgen Drud Hansen & Camilla Jensen & Erik Strøjer Madsen, 2002. "The Establishment of the Danish Windmill Industry - Was it Worthwhile?," CIE Discussion Papers, University of Copenhagen. Department of Economics. Centre for Industrial Economics 2002-07, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    2. V. Heinrich Amavilah, 2003. "The Ebbinghaus Effect and the Implications of Net Learning for the Performance of Production Systems, with Some Experimental Results," Experimental, EconWPA 0307002, EconWPA.
    3. Warr, Benjamin & Ayres, Robert, 2006. "REXS: A forecasting model for assessing the impact of natural resource consumption and technological change on economic growth," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 17(3), pages 329-378, September.
    4. Chowdhry, Bhagwan & Garmaise, Mark J., 2003. "Organization Capital and Intrafirm Communication," University of California at Los Angeles, Anderson Graduate School of Management, Anderson Graduate School of Management, UCLA qt8j01z46g, Anderson Graduate School of Management, UCLA.
    5. Gomes, Orlando, 2008. "Interaction in organizations: A dynamic choice of codes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 37(4), pages 1570-1583, August.
    6. Madsen, Erik Strøjer & Jensen, Camilla & Hansen, Jørgen Drud, 2002. "Scale in Technology and Learning-by-Doing in the Windmill Industry," Working Papers 02-2, University of Aarhus, Aarhus School of Business, Department of Economics.

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