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The Learning Curve and Durable-Goods Production

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  • Atsuo Utaka

    () (Osaka University)

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.

Suggested Citation

  • Atsuo Utaka, 2001. "The Learning Curve and Durable-Goods Production," Economics Bulletin, AccessEcon, vol. 12(5), pages 1-8.
  • Handle: RePEc:ebl:ecbull:eb-01l10004
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    References listed on IDEAS

    as
    1. Bulow, Jeremy I, 1982. "Durable-Goods Monopolists," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 314-332, April.
    2. Cabral, Luis M B & Riordan, Michael H, 1994. "The Learning Curve, Market Dominance, and Predatory Pricing," Econometrica, Econometric Society, vol. 62(5), pages 1115-1140, September.
    3. Michael Waldman, 1996. "Planned Obsolescence and the R&D Decision," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 583-595, Autumn.
    4. Olsen, Trond E., 1992. "Durable goods monopoly, learning by doing and the Coase conjecture," European Economic Review, Elsevier, vol. 36(1), pages 157-177, January.
    5. Atsuo Utaka, 2000. "Planned obsolescence and marketing strategy," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 339-344.
    6. A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
    7. Stanley C. Hollander & Kathleen M. Rassuli (ed.), 1993. "Marketing," Books, Edward Elgar Publishing, volume 0, number 512.
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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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