Competition, learning and investment in new technology

Chester Chambers, Panos Kouvelis

Research output: Contribution to journalArticlepeer-review

Abstract

Efforts to describe the evolution of production costs must simultaneously include the impact of investment in new technologies as well as experience-based learning. In this paper we formulate a dynamic model of technological investments, which includes the impacts of learning curve effects, investment levels in new technologies with uncertain timing, and competitive responses. Our results highlight the interaction of investment and output rate decisions in monopolistic and duopolistic situations, and illuminate the impact of the planning horizon length on such decisions. The model results elaborate upon how the attractiveness of new technologies is related to the firm's ability to learn using its existing technology, how competition can increase or decrease the market size for new technologies, and how investment levels are driven in opposite directions by considering longer horizons on one hand and the competitive response on the other.

Original languageEnglish (US)
Pages (from-to)863-878
Number of pages16
JournalIIE Transactions (Institute of Industrial Engineers)
Volume35
Issue number9
DOIs
StatePublished - Sep 1 2003
Externally publishedYes

ASJC Scopus subject areas

  • Industrial and Manufacturing Engineering

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