The Learning Curve and Durable-Goods Production
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.
Volume (Year): 12 (2001)
Issue (Month): 5 ()
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- Michael Waldman, 1996. "Planned Obsolescence and the R&D Decision," RAND Journal of Economics, The RAND Corporation, vol. 27(3), pages 583-595, Autumn.
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- A. M. Spence, 1981. "The Learning Curve and Competition," Bell Journal of Economics, The RAND Corporation, vol. 12(1), pages 49-70, Spring.
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