Experience curve

The model allows for the distinction made between experience and learning curves by the Boston Consulting Group and used in the following. An experience curve measures the performance relative to all external inputs to the system, a learning curve measures performance in relation to one particular input. An experience curve requires that all external inputs are measured in the same unit, usually money. For a learning curve, the input does not have to be monetarized but the learning system could quasi-improve the performance by substituting inputs.

Page 19 Wene (2008) in Foxon, Kohler and Oughton (2008) Innovation For A Low Carbon Economy Economic, Institutional and Management Approaches Cheltenham: Edward Elgar

 

Experience curves are also known as technology learning and in some literature as ‘learning-by-doing’. In common parlance, the phenomena are also known as learning curves…. In essence the theory goes, for every doubling in global installed capacity or sales, there is a corresponding reduction in costs which is remarkably consistent for a given technology over successive doublings.

Page 219 Hinnels and Boardman  in  Foxon, T, Kohler, J. and Oughton, C. (2008) Innovation For A Low Carbon Economy Economic, Institutional and Management Approaches Cheltenham: Edward Elgar

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