Kaldasch, Joachim (2011): The experience curve and the market size of competitive consumer durable markets.
Download (455kB) | Preview
An evolutionary model of the product life cycle is applied to derive the experience curve and the market size of (expensive) durable goods. The experience (learning) curve suggests that the real costs per unit decrease with an increasing cumulative output (Henderson's law). Based on the idea that in a competitive market firms are forced to pass cost advantages on to the price, the evolutionary model suggests that the mean price and also the mean costs are governed by an exponential decline with time. Simultaneously the mean price evolution satisfies Henderson's law. The market size is defined here by the number of active firms. The market size is shown to follow the total market revenue if the latter exhibits fast variations, else the size is nearly constant. A comparison with an empirical investigation confirms the model predictions.
|Item Type:||MPRA Paper|
|Original Title:||The experience curve and the market size of competitive consumer durable markets|
|Keywords:||experience curve; learning curve; market evolution; evolutionary economics; economic growth; product diffusion; Gompertz diffusion; product life cycle; durable goods|
|Subjects:||D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D41 - Perfect Competition
D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving
A - General Economics and Teaching > A1 - General Economics > A10 - General
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E27 - Forecasting and Simulation: Models and Applications
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C50 - General
B - History of Economic Thought, Methodology, and Heterodox Approaches > B5 - Current Heterodox Approaches > B52 - Institutional ; Evolutionary
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles
|Depositing User:||Joachim Kaldasch|
|Date Deposited:||14. Sep 2011 11:27|
|Last Modified:||12. Feb 2013 12:53|
J. Kaldasch, Evolutionary Model of an Anonymous Consumer Durable Market, Physica A, 390, (2011) 2692-2715.
J. Kaldasch, The Product Life Cycle of Durable Goods, Preprint cond-mat/11090828 (2011).
T.P. Wright, Factors Affecting the Cost of Airplanes, Journal of Aeronautical Sciences, 3(4) (1936) 122-128.
S. Hollensen, Marketing Management: A Relationship Approach, Pearson Education (2010).
Z. Wang, Income Distribution, Market Size and the Evolution of Industry, Review of Economic Dynamics, 11(3), 542-565, (2007).
R. Feistel, W. Ebeling, Physics of Self-Organization and Evolution, Wiley VCH (2011).
E.D. Beinhocker, The Origin of Wealth, Harvard Business School Press (2006).
C. A. Silva, V. M. Yakovenko, Temporal evolution of the “thermal” and “superthermal” income classes in the USA during 1983–2001, Europhys. Lett. 69 (2005) 304-310.
V.M. Yakovenko, Econophysics, Statistical Approach to, in Encyclopaedia of Complexity and System Science, edited by R. A. Meyers, Springer (2009).
V.M. Yakovenko, J. B. Rosser, Colloquium: Statistical Mechanics of Money, Wealth, and Income, Reviews of Modern Physics 81, (2009) 1703-1725.
L. Tvede, Business Cycles, History, Theory and Investment Reality, Jon Wiley & Sons (2006).
W.L. Hieber, Lern- und Erfahrungskurveneffekte, Vahlen, München (1991).
R. M. Grant, Contemporary strategy analysis Blackwell Pub. (2004).
C.-O. Wene, Stimulating Learning Investments for Renewable Energy Technology, EMF/IEA/IEW Workshop, Stanford (2000).
P. Söderholm, G. Klassen, Wind Power in Europe: A Simultaneous Innovation-Diffusion Model, Environmental and Resource Economics 36 (2007) 163-190.