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 ZBW - German National Library of Economics in its series EconStor Preprints with number 59749.
Date of creation: 2011
Date of revision:
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More information through EDIRC
experience curve; learning curve; market evolution; evolutionary economics; economic growth; product diffusion; Gompertz diffusion; product life cycle; durable goods;
Other versions of this item:
- Kaldasch, Joachim, 2011. "The experience curve and the market size of competitive consumer durable markets," MPRA Paper 33370, University Library of Munich, Germany.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
- A10 - General Economics and Teaching - - General Economics - - - General
- E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- B - Schools of Economic Thought and Methodology
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.:
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33174, University Library of Munich, Germany.
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