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When does Learning by Doing generate current losses?

Author

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  • Francisco Alvarez

    () (Departamento de Análisis Económico II, Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Somosaguas, Madrid, Spain Departamento de Análisis Económico I, Universidad Complutense de Madrid, Spain)

  • Emilio Cerdá

    () (Departamento de Análisis Económico II, Universidad Complutense de Madrid, Campus de Somosaguas, 28223 Somosaguas, Madrid, Spain Departamento de Análisis Económico I, Universidad Complutense de Madrid, Spain)

Abstract

We study under which conditions a learning by doing effect in the industry causes a monopolist to operate at a loss for some initial periods. Those conditions involve a parameter of the learning process, the slope of inverse demand function and the discount parameter. In order to get results, we explore the analytical solution to a T-period learning by doing model, which is also a novelty. Numerical examples are presented.

Suggested Citation

  • Francisco Alvarez & Emilio Cerdá, 2001. "When does Learning by Doing generate current losses?," Spanish Economic Review, Springer;Spanish Economic Association, vol. 3(1), pages 55-69.
  • Handle: RePEc:spr:specre:v:3:y:2001:i:1:p:55-69
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    Cited by:

    1. Alvarez, F. & Cerda, E., 2003. "Learning by doing in a T-period production planning: Analytical solution," European Journal of Operational Research, Elsevier, vol. 150(2), pages 353-369, October.

    More about this item

    Keywords

    Learning by Doing; monopoly; industrial organization; dynamic programming;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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