Learning by Doing and Competition in the Early Rayon Industry

Abstract

In this paper, I derive a structural econometric model of learning by doing from a dynamic oligopoly game. Unlike previous empirical models, this model is capable of testing hypotheses concerning both the technological nature and behavioral implications of learning. I estimate the model with firm level data from the early U.S. rayon industry. The empirical results show that there were considerable differences across firms in both proprietary and spillover learning. The results also indicate that two of the three firms took their rival's reactions into account when choosing their strategies.

Testing dynamic oligopolistic interaction: evidence from the semiconductor industry

“…In the case of learning-by-doing and no or small spillovers q it and q js will be strategic substitutes. If spillovers are large enough q it and q js will be strategic complements (Jarmin (1994)). …”

“…However, do firms take their rivals' future reactions into account when they choose their output strategies today? Jarmin (1994) asked this question for the early rayon industry and found empirical evidence of dynamic strategic behavior.…”

“…However, Jarmin (1994) investigated these dynamic effects for the early rayon industry. His results show that firms take their rivals' reactions into account when choosing their output strategies.…”

“…In this paper I apply a simplified version of Jarmin (1994)'s dynamic oligopoly model, a T-period extension of the two period game by Fudenberg and Tirole (1983), to the DRAM industry. The empirical framework for examining the dynamic effects of learning-by-doing and spillovers is an intraindustry study of the kind described in Bresnahan (1989).…”

Source of Cost Reduction in Solar Photovoltaics

“…This has led many researchers to look for other explanatory factors like R&D, engineering effort, and managerial policies which might be correlated with cumulated firm or industry output. These attempts have had mixed results, with Adler and Clark (1991), Mishina (1992), Jarmin (1994) andLieberman (1984) finding that other variables only augment the effect of learning or have no effect at all. Other studies, find that the explanatory power of learning variables decrease when other factors are properly accounted for.…”