In economic models of “learning-by-doing,” technological progress is an incidental outcome of production: the more a firm or worker does something, the better they get at it. In its stronger form, the idea is formalized as a “learning curve” (also sometimes called an experience curve or Wright’s Law), which asserts that every doubling of
I wonder what role "comodization" plays. When price is the decisive competitive criterion, e.g. in electricity production, all innovation revolves around making the product cheaper. In patent-protected areas such as pharmaceuticals, the benefit is predominant. Accordingly, there are different learning curves: learning curve a) concerns production costs - it mainly is the task of business administration. Learning curve b) concerns the benefit - it is the task of R&D. (Pure economies of scale are dominant in software. There, even marketing optimization can increase productivity). This may be the reason why it is not possible to generalise what the main factors of productivity progress are.
In the case of solar modules, the competitive factors of price vs. performance are themselves in competition with each other. 18% power conversion efficiency in solar modules is cheaper than 24%, but in certain cases of space constraints, the higher power efficiency may be the better choice for the buyer. But in general, the jackpot has been cheapness, which is why China has been able to become the main global producer of solar modules very quickly, virtually without much experience, just by providing cheap labour.
In China, a fully automated module factory will soon go into operation that can produce 60 GW (!) per year. In contrast, there are innovators working on modules with up to 30% efficiency. In a commodity market like solar modules, however, it is likely to remain decisive who sets the benchmark in terms of price.
How useful are learning curves, really?
As always, rather interesting post!
I wonder what role "comodization" plays. When price is the decisive competitive criterion, e.g. in electricity production, all innovation revolves around making the product cheaper. In patent-protected areas such as pharmaceuticals, the benefit is predominant. Accordingly, there are different learning curves: learning curve a) concerns production costs - it mainly is the task of business administration. Learning curve b) concerns the benefit - it is the task of R&D. (Pure economies of scale are dominant in software. There, even marketing optimization can increase productivity). This may be the reason why it is not possible to generalise what the main factors of productivity progress are.
In the case of solar modules, the competitive factors of price vs. performance are themselves in competition with each other. 18% power conversion efficiency in solar modules is cheaper than 24%, but in certain cases of space constraints, the higher power efficiency may be the better choice for the buyer. But in general, the jackpot has been cheapness, which is why China has been able to become the main global producer of solar modules very quickly, virtually without much experience, just by providing cheap labour.
In China, a fully automated module factory will soon go into operation that can produce 60 GW (!) per year. In contrast, there are innovators working on modules with up to 30% efficiency. In a commodity market like solar modules, however, it is likely to remain decisive who sets the benchmark in terms of price.