Learning-By-Doing, Organizational Forgetting, and Industry Dynamics

67 Pages Posted: 14 Feb 2007

See all articles by Ulrich Doraszelski

Ulrich Doraszelski

Harvard University - Department of Economics; University of Pennsylvania - Business & Public Policy Department

David Besanko

Northwestern University - Kellogg School of Management

Yaroslav (Steve) Kryukov

Northwestern University - Department of Economics

Mark Satterthwaite

Northwestern University - Kellogg School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 2007

Abstract

Learning-by-doing and organizational forgetting have been shown to be important in a variety of industrial settings. This paper provides a general model of dynamic competition that accounts for these economic fundamentals and shows how they shape industry structure and dynamics. Previously obtained results regarding the dominance properties of firms' pricing behavior no longer hold in this more general setting. We show that organizational forgetting does not simply negate learning-by-doing. Rather, learning-by-doing and organizational forgetting are distinct economic forces. In particular, a model with both learning-by-doing and organizational forgetting can give rise to aggressive pricing behavior, market dominance, and multiple equilibria, whereas a model with learning-by-doing alone cannot.

Suggested Citation

Doraszelski, Ulrich and Besanko, David A. and Kryukov, Yaroslav (Steve) and Satterthwaite, Mark A., Learning-By-Doing, Organizational Forgetting, and Industry Dynamics (February 2007). Harvard Institute of Economic Research Discussion Paper No. 2128. Available at SSRN: https://ssrn.com/abstract=962878 or http://dx.doi.org/10.2139/ssrn.962878

Ulrich Doraszelski (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-2896 (Phone)
617-495-8570 (Fax)

University of Pennsylvania - Business & Public Policy Department

3641 Locust Walk
Philadelphia, PA 19104-6372
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David A. Besanko

Northwestern University - Kellogg School of Management ( email )

2211 Campus Drive
Evanston, IL 60208
United States
847-467-6505 (Phone)
847-467-1777 (Fax)

Yaroslav (Steve) Kryukov

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

Mark A. Satterthwaite

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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