Learning Curve and Industry Structure: Evidences from Iranian Manufacturing Industries

Authors

1 Department of Economics, Business School, Yazd University, Yazd, Iran.

2 Department of Economics, Kansas State University, USA.

Abstract

Empirical studies have shown that cost advantages can occur due to economies of scale and learning. However, a few studies have attempted to distinguish between these two effects on reducing costs. This paper is the first attempt to recognize the impact of learning on lowering costs by determining the effect of economies of scale in Iran. Therefore, this study aims to shed light on the cost benefits of industries based on learning and economies of scale in terms of their structures, as industries with various forms have different performances. Using industries at four-digit ISIC levels from 1997 to 2005, the findings show that learning rates are not uniform across industries. Learning rates are more than the effect of scale economies in only 11 among 31 industries. Moreover, the impact of learning in reducing costs in monopolistic industries is more than in oligopolistic and competitive industries; similarly, learning is more in oligopolistic than competitive industries. From a policy point of view, competitive industries should try to focus on achieving both dynamic and static dimensions of cost advantages to enhance their competitiveness and keep market shares.

Keywords

References

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Iranian Economic Review
Volume 24, Issue 3
September 2020
Pages 807-832

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