Learning and Forgetting: The Dynamics of Aircraft Production

Womer (1986)). Utilizing newly available production data for the Lockheed L-1011 Tri-Star, this paper studies commercial aircraft production, with an emphasis on the dynamics of production technology. Because commercial production is subject to many uncertainties not present in military production, the data presented here allows consideration of a richer set of hypotheses than was previously possible. In addition to learning, support is found for organizational forgetting (the hypothesis that the rm's production experience depreciates over time), and incomplete spillovers of production expertise from one generation of an aircraft to the next. This research is directed toward commercial aircraft for several reasons. The aircraft industry has many unique features | massive entry costs, dynamically increasing returns, imperfect competition, the fact that many countries consider it \strategic " | that make it important from a policy perspective, and the industry has frequently been the target of industrial policy, most notably in Europe. Dynamically increasing returns associated with learning make the industry a rare case in which infant industry protection may be theoretically valid, perhaps justifying such specialized policies