Estimates of Learning by Doing in the Manufacture Of Electric Power Gas Turbines
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This paper investigates LBO in prices and heat rates of gas turbines. We test whether the LBO spills over from production experience with smaller units. Progress ratios range from 0.83 to 0.95 for price and 0.89 to 0.94 for the heat rate. We do not find that learning spills over from the smaller size class. Since lower heat rates have an upward effect on price, the two learning effects offset one another so that the reduced form of experience on price is not significantly different from zero. The net result is that LBO has a large effect, but does not result in lower prices per se. The effects of cumulative experience are simultaneous increases in the performance, which tends to increase the value hence the price, and reductions in production costs, which allow the better unit to be sold for roughly the same price as the newer unit.
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Associate Research Professor in the Social Science Research Institute
Gale Boyd is an Associate Research Professor in the Social Science Research Institute & Department of Economics. He was the Director of the Triangle Federal Statistical Research Data Center from 2006-2020. Prior to joining Duke University, Gale was an economist at Argonne National Laboratory. His career has been primarily in area of industrial energy/environmental economics. His recent work includes using the non-public Census micro-data and other non-pubic dat