Demand Shocks, Learning-by-Doing and Exclusion

Bobtcheff, Catherine, Crampes, Claude and Lefouili, Yassine (2018) Demand Shocks, Learning-by-Doing and Exclusion. TSE Working Paper, n. 18-911, Toulouse

[img]
Preview
Text
Download (265kB) | Preview
Official URL: http://tse-fr.eu/pub/32606

Abstract

This note examines how an exogenous industry-wide demand shock, such as the one resulting from the use of governmental subsidies, affects the exclusionary potential of learning-by-doing. We develop a two-period duopoly model in which an increase in a firm's first-period output leads to a decrease in its second-period marginal cost, and apply it to two special scenarios: one in which demand and learning technologies are linear and one in which firms are infinitely impatient. In the first scenario, we establish that a positive demand shock amplifies the exclusionary effect of learning-by-doing if and only if firms are sufficiently asymmetric in their learning abilities. In the second scenario, we emphasize the key role of the demand curvature as a determinant of the effect of a demand shock on the exclusionary potential of learning-by-doing.

Item Type: Monograph (Working Paper)
Language: English
Date: April 2018
Place of Publication: Toulouse
Uncontrolled Keywords: Demand shocks, learning-by-doing, market structure, exit
JEL codes: D11 - Consumer Economics - Theory
L13 - Oligopoly and Other Imperfect Markets
Q4 - Energy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 24 Apr 2018 11:32
Last Modified: 24 Jul 2018 12:35
OAI ID: oai:tse-fr.eu:32606
URI: http://publications.ut-capitole.fr/id/eprint/25905

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year