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Moore's Law and the Semiconductor Industry: A Vintage Model

Author

Listed:
  • Ana Aizcorbe

    (Bureau of Economic Analysis)

  • Samuel Kortum

    (University of Minnesota)

Abstract

In this paper we develop a vintage model to gain a better understanding of the semiconductor industry and its role in recent U.S. productivity gains. Unlike previous work, in our model the observed price declines of individual chips are driven by the introduction of better vintages rather than by learning economies. Dominated chips, nonetheless, continue to be produced, for a time, due to sunk investments in chip‐specific production equipment. The model lends partial support to Jorgenson's hypothesis that an exogenous increase in Moore's Law could have generated the more rapid price declines, and faster productivity growth, seen after 1995.
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Suggested Citation

  • Ana Aizcorbe & Samuel Kortum, 2004. "Moore's Law and the Semiconductor Industry: A Vintage Model," Industrial Organization 0412008, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0412008
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    References listed on IDEAS

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    Cited by:

    1. Auer, Raphael & Sauré, Philip, 2014. "Spatial Competition in Quality," CEPR Discussion Papers 10027, C.E.P.R. Discussion Papers.
    2. Wendy C. Y. Li & Bronwyn H. Hall, 2020. "Depreciation of Business R&D Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(1), pages 161-180, March.
    3. Boyan Jovanovic & Chung-Yi Tse, 2006. "Creative Destruction in Industries," NBER Working Papers 12520, National Bureau of Economic Research, Inc.
    4. Ana Aizcorbe & Stephen D Oliner & Daniel E Sichel, 2008. "Shifting Trends in Semiconductor Prices and the Pace of Technological Progress," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 43(3), pages 23-39, July.
    5. Siebert Ralph B, 2010. "Learning-by-Doing and Cannibalization Effects at Multi-Vintage Firms: Evidence from the Semiconductor Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-32, May.
    6. Unni Pillai, 2013. "A Model of Technological Progress in the Microprocessor Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 61(4), pages 877-912, December.
    7. Tsai, Yingyi & Lin, Justin Yifu & Kurekova, Lucia, 2009. "Innovative R&D and optimal investment under uncertainty in high-tech industries: An implication for emerging economies," Research Policy, Elsevier, vol. 38(8), pages 1388-1395, October.
    8. Adam Hale Shapiro & Adam Copeland, 2010. "The Impact of Competition on Technology Adoption: An Apples-to-PCs Analysis," 2010 Meeting Papers 181, Society for Economic Dynamics.
    9. Dennis Fixler, 2009. "Accounting for R&D in the National Accounts," BEA Papers 0094, Bureau of Economic Analysis.
    10. Raphael Auer & Philip Sauré, 2011. "Spatial Competition in Quality, Demand Induced Innovation, and Schumpeterian Growth," DEGIT Conference Papers c016_067, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. Ana Aizcorbe, 2005. "Price Deflators for High Technology Goods and the New Buyer Problem," Industrial Organization 0502009, University Library of Munich, Germany.
    12. Samuel Kortum & Unni Pillai, 2014. "Comment on "Productivity and Potential Output Before, During, and After the Great Recession"," NBER Chapters, in: NBER Macroeconomics Annual 2014, Volume 29, pages 52-59, National Bureau of Economic Research, Inc.
    13. Adam Copeland & Adam Hale Shapiro, 2013. "Price Setting in an Innovative Market," Working Paper Series 2013-04, Federal Reserve Bank of San Francisco.
    14. Kaldasch, Joachim, 2014. "Evolutionary Model of Moore’s Law," MPRA Paper 54397, University Library of Munich, Germany.
    15. Samuel Kortum & Unni Pillai, 2015. "Comment," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 52-59.
    16. Boyan Jovanovic & Chung-Yi Tse, 2010. "Entry and Exit Echoes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 514-536, July.
    17. Kim, Jin-Hyuk & Komatsu, Takehiko & Owan, Hideo, 2020. "The role of design method and process technology in stable outsourcing equilibria," International Journal of Industrial Organization, Elsevier, vol. 69(C).

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    More about this item

    Keywords

    Semiconductors; High Technology Industries;

    JEL classification:

    • L - Industrial Organization

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