1988 Articles

Learning-by-Doing, Market Structure and Industrial and Trade Policies

Stiglitz, Joseph E.; Dasgupta, Partha

This paper addresses the nature of competition in an industry in which firms experience learning-by-doing. It identifies conditions under which competition leads to an emergence of monopoly and conditions under which competition persists. Certain distinguished industrial and trade policies are then studied. The per-se doctrine is examined. Conditions are located in which the infant industry is valid. By way of contrast, it is argued that, if foreign learning is likely to be vastly superior, there may be a case for import subsidies.