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Learning-by-Doing, Organizational Forgetting, and Industry Dynamics

  • David Besanko
  • Ulrich Doraszelski
  • Yaroslav Kryukov
  • Mark Satterthwaite

Learning-by-doing and organizational forgetting have been shown to be important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these economic fundamentals and shows how they shape industry structure and dynamics. Previously obtained results regarding the dominance properties of firms' pricing behaviour no longer hold in this more general setting. We show that organizational forgetting does not simply negate learning-by-doing. Rather, learning-by-doing and organizational forgetting are distinct economic forces. In particular, a model with both learning-by-doing and organizational forgetting can give rise to aggressive pricing behaviour, market dominance, and multiple equilibria, whereas a model with learning-by-doing alone cannot.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 321307000000000903.

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Date of creation: 14 Mar 2007
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Handle: RePEc:cla:levrem:321307000000000903
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