Definition
Experience curve: unit cost declines by a constant percentage with cumulative output (scale + learning). Learning curve isolates productivity gains from worker/process learning over repetitions.

Introduction
Falling costs aren’t just about plant size—they’re about cumulative know-how: design simplification, yield improvement, supply contracts.

Explanation

Drivers: process innovation, standardization, automation, supplier learning, design for manufacturability.

Strategic uses: price ahead of cost to gain share; invest to stay on a steeper curve; deter entry via credible cost path.

Risks: learning plateaus; tech discontinuities reset curves; demand may not support volume.

Measure: track cost vs. cumulative units; separate mix effects.

Key Takeaways

Volume + learning can create durable cost advantage.

Guard against technology resets that flatten your curve.

Pair with demand strategy to avoid “efficient but empty” plants.

Real-World Case
Solar PV module costs fell dramatically with cumulative global installations—scale, supply chain learning, and tech improvements.