The Experience Curve Reviewed

Abstract

This chapter explores various aspects of experience curve in the field of strategy evolution. Experience curve is the name applied in 1966 to overall cost behavior by Boston Consulting Group (BCG). It can be observed that if high return-on-investment thresholds are used to limit capital investment, then costs do not decline as expected. It can also be observed that extensive substitution of cost elements and exchange of labor for capital is characteristic of progress down a cost experience curve. The experience curve is a contradiction of some of the most basic assumptions of classic economic theory. The whole concept of a free enterprise competitive equilibrium assumes that all competitors can achieve comparable costs at volumes much less than pro rata shares of market. The experience curve effect can be observed and measured in any business, any industry, and any cost element, anywhere.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 91 citations exist upstream.