The experience curve and the market size of competitive consumer durable markets
AbstractAn evolutionary model of the product life cycle is applied to derive the experience curve and the market size of (expensive) durable goods. The experience (learning) curve suggests that the real costs per unit decrease with an increasing cumulative output (Henderson's law). Based on the idea that in a competitive market firms are forced to pass cost advantages on to the price, the evolutionary model suggests that the mean price and also the mean costs are governed by an exponential decline with time. Simultaneously the mean price evolution satisfies Henderson's law. The market size is defined here by the number of active firms. The market size is shown to follow the total market revenue if the latter exhibits fast variations, else the size is nearly constant. A comparison with an empirical investigation confirms the model predictions.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 33370.
Date of creation: 14 Sep 2011
Date of revision:
experience curve; learning curve; market evolution; evolutionary economics; economic growth; product diffusion; Gompertz diffusion; product life cycle; durable goods;
Other versions of this item:
- Joachim Kaldasch, 2011. "The Experience Curve and the Market Size of Competitive Consumer Durable Markets," EconStor Preprints 59749, ZBW - German National Library of Economics.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- A10 - General Economics and Teaching - - General Economics - - - General
- E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-22 (All new papers)
- NEP-BEC-2011-09-22 (Business Economics)
- NEP-COM-2011-09-22 (Industrial Competition)
- NEP-EVO-2011-09-22 (Evolutionary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kaldasch, Joachim, 2011.
"The product life cycle of durable goods,"
33174, University Library of Munich, Germany.
- Joachim Kaldasch, 2013.
"Evolutionary Model of a Anonymous Consumer Durable Market,"
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