DP3734 | Learning by Doing and Multiproduction Effects Over the Life Cycle: Evidence from the Semiconductor Industry

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01/02/2003

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Abstract

In this study we derive a structural econometric model of learning by doing with multiproduct competition from a dynamic oligopoly game. We show the importance to account for multiproduction effects through product differentiation when measuring learning by doing. Using quarterly firm-level data for the dynamic random access memory semiconductor industry, we provide evidence that accounting for multiproduction results in lower learning effects and firms behaving more competitive in the product market. We can confirm that firms follow intertemporal production plans for investing in future cost reductions. We also find that learning effects are higher at the beginning of the life cycle.