The learning curve in a competitive industry

Eric Rasmusen and Santanu Roy
Authors registered in the RePEc Author Service: Emmanuel Petrakis

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We consider the learning curve in an industry with free entry and exit, and price-taking firms. A unique equilibrium exists if the fixed cost is positive. While equilibrium profits are zero, mature firms earn rents on their learning, and, if costs are convex, no firm can profitably enter after the date the industry begins. Under some cost and demand conditions, however, firms may have to exit the market despite their experience gained earlier. Furthermore identical firms facing the same prices may produce different quantities. The market outcome is always socially efficient, even if dictates that firms exit after learning. Finally, actual and optimal industry concentration does not always increase in the intensity of learning.

Keywords: Learning; curve; Industry; evolution; Perfect; competition (search for similar items in EconPapers)
Date: 1994-06
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Learning Curve in a Competitive Industry (1997)
Working Paper: The Learning Curve in a Competitive Industry (1995)
Working Paper: The Learning Curve in a Competitive Industry (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:2914

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