Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 02-2: Scale in Technology and Learning-by-Doing in the Windmill Industry

Erik Strøjer Madsen (), Camilla Jensen and Jørgen Drud Hansen
Additional contact information
Erik Strøjer Madsen: Department of Economics, Aarhus School of Business, Postal: The Aarhus School of Business, Prismet, Silkeborgvej 2, DK 8000 Aarhus C, Denmark
Camilla Jensen: Copenhagen Business School
Jørgen Drud Hansen: University of Southern Denmark

Abstract: This paper examines the remarkable development of technology and the fast learning-by-doing in the windmill industry since it emerged in the beginning of the 1980s. Based on time series of prices of windmills a dynamic cost function for producing windmills is tested. The estimations verified that learning-by-doing in the Danish windmill industry has contributed significantly to improve the cost efficiency of the producers. The technological development has been stimulated both by process and product innovations as the capacity of the individual mills has increased. The learning effect created by early subsidies from the government has consolidated the competitive advantages of the windmill cluster in Denmark and preserved the first mover advantages at the world market. The article concludes that the industry probably will enter into a matured phase in the future with more modest technological growth.

Keywords: Learning-by-doing; scale in technology; process and product innovations

JEL-codes: D20; L60

18 pages, January 1, 2002

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02-2_esm.pdf PDF-file 

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