Learning-by-Doing, Organizational Forgetting and Industry Dynamics

David Besanko, Ulrich Doraszelski, Yaroslav Kryukov and Mark Satterthwaite

No 6160, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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.

Keywords: Dynamic games; Learning-by-doing; Organizational forgetting (search for similar items in EconPapers)
JEL-codes: C73 D43 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-bec, nep-mic and nep-tid
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Citations: View citations in EconPapers (11)

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Working Paper: Learning-by-Doing, Organizational Forgetting, and Industry Dynanmics (2005)
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