Can stimulating demand drive costs down? World War II as a natural experiment

François Lafond, Diana Greenwald and J. Farmer

MPRA Paper from University Library of Munich, Germany

Abstract: For many products, increases in cumulative production are associated with de- creasing unit costs. However, a serious problem of reverse causality (lower prices leading to increasing demand) makes it difficult to use this relationship for pol- icy. We study World War II, during which the demand for military products was largely exogenous, and the correlation between production, cumulative produc- tion and an exogenous time trend was limited. Our results indicate that decreases in cost can be attributed roughly equally to the growth of experience and to an exogenous time trend.

Keywords: innovation policy; learning curve; natural experiment; World War II. (search for similar items in EconPapers)
JEL-codes: N62 O31 O38 (search for similar items in EconPapers)
Date: 2020-06-01
New Economics Papers: this item is included in nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Can Stimulating Demand Drive Costs Down? World War II as a Natural Experiment (2022)
Working Paper: Can stimulating demand drive costs down? World War II as a natural experiment (2020)
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