%S TSE Working Paper
%A Catherine Bobtcheff
%A Claude Crampes
%A Yassine Lefouili
%T Demand Shocks, Learning-by-Doing and Exclusion
%X 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.
%K Demand shocks
%K learning-by-doing
%K market structure
%K exit
%B TSE Working Paper
%V 18-911
%D 2018
%C Toulouse
%I TSE Working Paper
%L publications25905