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Learning-by-Doing and Cannibalization Effects at Multi-Vintage Firms: Evidence from the Semiconductor Industry

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  • Siebert Ralph B

    (Purdue University)

Abstract
Previous studies on the measurement of learning-by-doing emphasize the importance of accounting for multi-vintage effects having an impact on firms' production costs through economies of scope. This study shows that accounting for cannibalization effects on the demand side is equally important for the adequate measurement of learning. Since multi-vintage firms anticipate the demand-side cannibalization effects in their production optimization, a previously omitted incentive to decrease production is captured having an impact on the measurement of learning by doing. We derive an empirical model from a dynamic oligopoly game of learning-by-doing and allow cannibalization effects to enter from the demand side. Using quarterly firm-level data for the dynamic random access memory semiconductor industry, we find support for cannibalization effects entering firms' pricing relations resulting in higher estimated learning effects.

Suggested Citation

  • Siebert Ralph B, 2010. "Learning-by-Doing and Cannibalization Effects at Multi-Vintage Firms: Evidence from the Semiconductor Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-32, May.
    • Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:37
    DOI: 10.2202/1935-1682.1946
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    Cited by:

    1. Jeremiah Harris & Ralph Siebert, 2015. "Driven by the Discount Factor: Impact of Mergers on Market Performance in the Semiconductor Industry," CESifo Working Paper Series 5199, CESifo.
    2. Ralph Siebert, 2016. "The Impact of Horizontal Mergers on Market Structure: Evidence from the Semiconductor Industry," CESifo Working Paper Series 5911, CESifo.
    3. Ralph B. Siebert, 2022. "What Determines Heterogeneous Merger Effects on Competitive Outcomes?," Journal of Industrial Economics, Wiley Blackwell, vol. 70(1), pages 217-256, March.
    4. 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.
    5. Ralph Siebert, 2017. "Heterogeneous Merger Impacts on Competitive Outcomes," CESifo Working Paper Series 6607, CESifo.
    6. Danial Asmat, 2021. "Collusion Along the Learning Curve: Theory and Evidence From the Semiconductor Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 69(1), pages 83-108, March.
    7. Ralph B. Siebert, 2019. "Estimating Differential Dynamic Merger Effects on Market Structure and Entry in Related Markets," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(3), pages 431-458, November.
    8. Harris, Jeremiah & Siebert, Ralph, 2017. "Firm-specific time preferences and postmerger firm performance," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 32-62.
    9. Siebert, Ralph Bernd, 2017. "A structural model on the impact of prediscovery licensing and research joint ventures on innovation and product market efficiency," International Journal of Industrial Organization, Elsevier, vol. 54(C), pages 89-124.

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    More about this item

    Keywords

    dynamic random access memory; dynamics; economies of scale; learning by doing; multiproduct firms; product life cycle; semiconductors;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D00 - Microeconomics - - General - - - General

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