Working Paper: NBER ID: w7127
Authors: C. Lanier Benkard
Abstract: This paper introduces a new cost dataset for a commercial aircraft firm and uses this data to analyze the dynamics of learning in commercial aircraft production. This dataset is found to be inconsistent with the simple learning hypothesis, and particularly the prediction that a firm's unit cost must decline with its cumulative production. Instead, strong support is found for the hypothesis of organizational forgetting, a more general learning model where unit costs are similarly dependent on a firm's past production experience, but where that experience depreciates over time. Additionally, it is found that some, but not all, of a firm's production experience transfers from one generation of an aircraft to the next. This evidence adds to our understanding of productivity in industries with learning and thus has implications to many fields of economics.
Keywords: learning-by-doing; organizational forgetting; aircraft production; industrial policy
JEL Codes: L62; D24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Cumulative production (E23) | Unit costs (A39) |
| Organizational forgetting (L29) | Productivity (O49) |
| Cumulative production (E23) | Organizational forgetting (L29) |
| New model introduction (Y20) | Production costs (D24) |