Learning by Doing and the Demand for Advanced Products

How much does consumer learning by doing affect the demand for advanced products? In the context of digital cameras, I use detailed picture-level data to directly measure changes in picture quality as a result of learning by doing or product switching. Although learning by doing builds up consumer human capital, a fraction of this human capital is product specific, creating consumer switching costs. To quantify the role of consumer human capital, I structurally estimate the demand for digital cameras with consumer learning by doing. The evolution of consumer human capital explains 23% of the sales of advanced digital cameras, whereas brand-specific human capital—arising from incompatibility in product design—explains 15% of consumer brand-choice inertia.

Data and the online appendix are available at https://doi.org/10.1287/mksc.2018.1118.