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Strategic Implications of Learning by Doing

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  • Aidan Hollis

Abstract

This paper examines firm strategy when competitors are at different points along the learning curve. It shows that firms high on the learning curve will have strong incentives to exclude new competitors, while firms that are learning more slowly will have weaker incentives to hinder new competitors and may even wish to encourage entry. The same strategies are shown to apply when firm reputation is acquired through participation in an industry. Several examples of strategic behaviour that take advantage of differential learning speeds or heterogeneous reputations are suggested and a variety of applications of the principle involved are explored.

Suggested Citation

  • Aidan Hollis, 2002. "Strategic Implications of Learning by Doing," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(2), pages 157-174.
    • Handle: RePEc:taf:ijecbs:v:9:y:2002:i:2:p:157-174
    DOI: 10.1080/13571510210134637
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    References listed on IDEAS

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    Cited by:

    1. Nisvan Erkal, 2005. "Optimal Licensing Policy in Differentiated Industries," The Economic Record, The Economic Society of Australia, vol. 81(252), pages 51-60, March.
    2. Peter Thompson, 2012. "The Relationship between Unit Cost and Cumulative Quantity and the Evidence for Organizational Learning-by-Doing," Journal of Economic Perspectives, American Economic Association, vol. 26(3), pages 203-224, Summer.
    3. Ana Espínola-Arredondo & Félix Muñoz-García, 2013. "Uncovering Entry Deterrence in the Presence of Learning-by-Doing," Journal of Industry, Competition and Trade, Springer, vol. 13(3), pages 319-338, September.
    4. Thompson, Peter, 2010. "Learning by Doing," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 429-476, Elsevier.

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