 Market equilibrium strategies under learning by doing and spilloversMarkus Eigruber and Franz Wirl Energy Economics, 2024, vol. 131, issue C Abstract: We investigate intertemporal strategic interactions if monopolies, cartels, or oligopolies benefit from firm internal as well as external learning by doing. Our analysis is carried out for a linear learning cost curve, which allows the derivation of the linear Markov perfect equilibrium (LMPE). The model yields surprising properties: First and highly policy-relevant is the non-existence of equilibria except for very few firms and sufficiently large spillovers, although the corresponding open loop as well as the collusive (cartel) equilibria and the monopoly solution exist. This analytical result corroborates the empirical evidence on the many bankruptcies in the solar photovoltaic market. Second, from a policy perspective, learning could justify a restriction on the number of competitors in the marketplace, in particular if it is very effective. Third, surprising and of theoretical interest is that the linear (and symmetric) Markov perfect equilibrium need not be unique, which is a novel outcome for meaningful economic models. Keywords: Learning by doing; Differential game; Competition; Spillovers; Solar PV; Linear Markov perfect equilibrium (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:131:y:2024:i:c:s0140988324000550 DOI: 10.1016/j.eneco.2024.107347 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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