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Article
Monopolistic Screening Under Learning By Doing
RAND Journal of Economics (2010)
  • Dennis L Gärtner
Abstract

This article investigates the design of incentives in a dynamic adverse selection framework where agents’ production technologies display learning effects and agents’ learning rates are private knowledge. In a simple two-period model with full commitment available to the principal, we show that whether learning effects are over- or underexploited crucially depends on whether more efficient agents also learn faster (so costs diverge through learning effects) or whether it is the less efficient agents who learn faster (so costs converge). We further show that an overexploitation of learning effects can occur also if the full-commitment assumption is relaxed.

Keywords
  • Asymmetric Information,
  • Learning by Doing,
  • Regulation
Disciplines
Publication Date
Fall 2010
Citation Information
Dennis L Gärtner. "Monopolistic Screening Under Learning By Doing" RAND Journal of Economics Vol. 41 Iss. 3 (2010)
Available at: http://works.bepress.com/dennis_gartner/2/