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The experience curve from the economist's perspective

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  • Graham Hall
  • Sydney Howell

Abstract

This paper undertakes a critique of experience curves from several angles. It considers the extent to which they can be regarded as an extension of learning curves, and concludes that the benefits from learning‐by‐doing at plant level are exhausted relatively early. It goes on to consider the evidence that there is a common slope to experience curves, their usefulness for forecasting prices, and possible reasons for a spurious correlation between accumulated output and average cost. It concludes by demonstrating the differences in strategic implications between the various possible economic factors which may underlie the experience curve. The conclusion is that experience curves are partly spurious, and of little practical value in forecasting or decision making.

Suggested Citation

  • Graham Hall & Sydney Howell, 1985. "The experience curve from the economist's perspective," Strategic Management Journal, Wiley Blackwell, vol. 6(3), pages 197-212, July.
    • Handle: RePEc:bla:stratm:v:6:y:1985:i:3:p:197-212
    DOI: 10.1002/smj.4250060302
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    Citations

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    Cited by:

    1. Malte Schwoon, 2006. "Learning-by-doing, Learning Spillovers and the Diffusion of Fuel Cell Vehicles," Working Papers FNU-112, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2006.
    2. Reinhard Haas & Marlene Sayer & Amela Ajanovic & Hans Auer, 2023. "Technological learning: Lessons learned on energy technologies," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 12(2), March.
    3. Mads Greaker & Eirik Lund Sagen, 2004. "Explaining experience curves for LNG liquefaction costs: Competition matter more than learning," Discussion Papers 393, Statistics Norway, Research Department.
    4. Snorre Kverndokk & Knut Rosendahl & Thomas Rutherford, 2004. "Climate Policies and Induced Technological Change: Which to Choose, the Carrot or the Stick?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(1), pages 21-41, January.
    5. Daniel G. Arce, 2014. "Experience, Learning, and Returns to Scale," Southern Economic Journal, John Wiley & Sons, vol. 80(4), pages 938-947, April.
    6. Lan-fei Gao & Hui Li, 2024. "Overcoming the pitfalls of economies-of-scale in shared accommodation: How can effective multi-listing management enhance the sustainability of homestay businesses?," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-14, December.
    7. Mallik, Suman & Chhajed, Dilip, 2002. "Optimal Temporal Product Introduction Strategies under Valuation Changes and Learning," Working Papers 02-0126, University of Illinois at Urbana-Champaign, College of Business.
    8. Larry W. Van Tassell & Morgan D. Gray, 1993. "Experience curve effects in agriculture: An application to tennessee dairy farms," Agribusiness, John Wiley & Sons, Ltd., vol. 9(6), pages 585-593.
    9. Harashima, Taiji, 2009. "A Theory of Total Factor Productivity and the Convergence Hypothesis: Workers’ Innovations as an Essential Element," MPRA Paper 15508, University Library of Munich, Germany.
    10. Pastore, Lorenzo Mario & Lo Basso, Gianluigi & Sforzini, Matteo & de Santoli, Livio, 2022. "Technical, economic and environmental issues related to electrolysers capacity targets according to the Italian Hydrogen Strategy: A critical analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 166(C).
    11. Torstein Bye & Annegrete Bruvoll, 2008. "Multiple instruments to change energy behaviour: The emperor's new clothes?," Discussion Papers 549, Statistics Norway, Research Department.
    12. Dorel PARASCHIV & Mihai IVASCU & Lucian BELASCU, 2010. "Strategic Mutations In Terms Of Economic Turbulence. Case Study: Public Services," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 49(1-2), pages 113-123, April.
    13. Grafström, Jonas & Poudineh, Rahmat, 2021. "A review of problems associated with learning curves for solar and wind power technologies," Ratio Working Papers 347, The Ratio Institute.
    14. Harashima, Taiji, 2011. "A Model of Total Factor Productivity Built on Hayek’s View of Knowledge: What Really Went Wrong with Socialist Planned Economies?," MPRA Paper 29107, University Library of Munich, Germany.
    15. Malte Schwoon, 2006. "A Tool to Optimize the Initial Distribution of Hydrogen Filling Stations," Working Papers FNU-110, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2006.

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