Learning Effects In a Heterogeneous and Asymmetric Duopoly
Learning effects (experience curve, progress curves) have long been a topic for management and industrial organization research. Learning effects make today’s average costs depend negatively on past sales. Therefore a small “lead down the experience curve” provides a decisive advantage over rivals, as the management literature points out. Since small historical events can easily topple the market outcome to a monopoly of one of the firms, I suggest incorporating historical asymmetries between firms into the models in order to reflect this lead. In the literature, however, there are oligopoly models that are symmetric from the outset and generate symmetric equilibria (Fudenberg/ Tirole 1983; SmileylRavid 1983; Ghemawatl Spence 1985; Chu 1988). Would the equilibria in these models be drastically upset if small historical asymmetries were introduced?
Unable to display preview. Download preview PDF.
- Ghemawat, Pankaj/ Spence, A. Michael (1985) Learning Curve Spillovers and Market Performance, in: The Quarterly Journal of Economics, 100, Supplement, 839–852.Google Scholar
- Porter, Michael (1980) Competitive Strategy, The Free Press, New York/London.Google Scholar
- Smiley, Robert H./ Ravid, S. Abraham (1983) The Importance of Being First: Learning, Price and Strategy, in: The Quarterly Journal of Economics, 353–362Google Scholar