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How well do experience curves predict technological progress? A method for making distributional forecasts

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  • Lafond, François
  • Bailey, Aimee Gotway
  • Bakker, Jan David
  • Rebois, Dylan
  • Zadourian, Rubina
  • McSharry, Patrick
  • Farmer, J. Doyne

Abstract

Experience curves are widely used to predict the cost benefits of increasing the deployment of a technology. But how good are such forecasts? Can one predict their accuracy a priori? In this paper we answer these questions by developing a method to make distributional forecasts for experience curves. We test our method using a dataset with proxies for cost and experience for 51 products and technologies and show that it works reasonably well. The framework that we develop helps clarify why the experience curve method often gives similar results to simply assuming that costs decrease exponentially. To illustrate our method we make a distributional forecast for prices of solar photovoltaic modules.

Suggested Citation

  • Lafond, François & Bailey, Aimee Gotway & Bakker, Jan David & Rebois, Dylan & Zadourian, Rubina & McSharry, Patrick & Farmer, J. Doyne, 2018. "How well do experience curves predict technological progress? A method for making distributional forecasts," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 104-117.
  • Handle: RePEc:eee:tefoso:v:128:y:2018:i:c:p:104-117
    DOI: 10.1016/j.techfore.2017.11.001
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    Cited by:

    1. Elizabeth Baldwin & Yongyang Cai & Karlygash Kuralbayeva, 2018. "To Build or Not to Build? Capital Stocks and Climate Policy," CESifo Working Paper Series 6884, CESifo Group Munich.

    More about this item

    Keywords

    Forecasting; Technological progress; Experience curves;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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