Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Mar, 2010, Volume 78, Issue 2

Learning‐by‐Doing, Organizational Forgetting, and Industry Dynamics

https://doi.org/10.3982/ECTA6994
p. 453-508

David Besanko, Ulrich Doraszelski, Yaroslav Kryukov, Mark Satterthwaite

Learning‐by‐doing and organizational forgetting are empirically important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these fundamentals and shows how they shape industry structure and dynamics. We show that forgetting does not simply negate learning. Rather, they are distinct economic forces that interact in subtle ways to produce a great variety of pricing behaviors and industry dynamics. In particular, a model with learning and forgetting can give rise to aggressive pricing behavior, varying degrees of long‐run industry concentration ranging from moderate leadership to absolute dominance, and multiple equilibria.


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Supplemental Material

Supplement to "Learning-by-Doing, Organizational Forgetting, and Industry Dynamics"

PDF file containing proofs for the manuscript.

Supplement to "Learning-by-Doing, Organizational Forgetting, and Industry Dynamics"

A zip file containing information to replicate results.