Learning by Doing and the Demand for Advanced Products

55 Pages Posted: 9 Nov 2018

See all articles by Yufeng Huang

Yufeng Huang

University of Rochester - Simon Business School

Date Written: March 12, 2018

Abstract

How much does consumer learning by doing affect the demand for advanced products? In the context of digital cameras, I use detailed picture-level data to directly measure changes in picture quality as a result of learning by doing or product switching. While learning by doing builds up consumer human capital, a fraction of this human capital is product-specific, creating consumer switching costs. To quantify the role of consumer human capital, I structurally estimate the demand for digital cameras with consumer learning by doing. The evolution of consumer human capital explains 23% of the sales of advanced digital cameras, whereas brand-specific human capital –arising from incompatibility in product design – explains 15% of consumer brand-choice inertia.

Keywords: Consumer Human Capital, Learning by Doing, Switching Costs, Product Diffusion, Dynamic Programming

Suggested Citation

Huang, Yufeng, Learning by Doing and the Demand for Advanced Products (March 12, 2018). Available at SSRN: https://ssrn.com/abstract=2697074 or http://dx.doi.org/10.2139/ssrn.2697074

Yufeng Huang (Contact Author)

University of Rochester - Simon Business School ( email )

Rochester, NY 14627
United States

HOME PAGE: http://https://sites.google.com/site/yufenghuangphd/

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