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

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    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 behavior no longer hold in this more general setting. We show that forgetting does not simply negate learning. Rather, learning and forgetting are distinct economic forces. In particular, a model with learning and forgetting can give rise to aggressive pricing behavior, market dominance, and multiple equilibria, whereas a model with learning alone cannot.

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    File URL: http://www.andrew.cmu.edu/user/kryukov/Learning.pdf
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    Paper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 2009-E22.

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    Date of creation: Dec 2008
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    Handle: RePEc:cmu:gsiawp:1252685262
    Contact details of provider: Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
    Web page: http://www.tepper.cmu.edu/

    Order Information: Web: http://student-3k.tepper.cmu.edu/gsiadoc/GSIA_WP.asp

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