An Analysis of Cost Improvement in Chemical Process Technologies

by Edward W. Merrow

Download eBook for Free

FormatFile SizeNotes
PDF file 2.4 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Cost improvement — sometimes called the learning curve or progress curve — plays a crucial role in the competitiveness of the U.S. chemical industry. More rapid cost improvement for a product results in expanding market share and larger profits. Using information from ten in-depth case studies and a database consisting of year-by-year market histories of 44 chemical products, including organic chemicals, inorganic chemicals, synthetic fibers, and primary metals, this report explores the relationships among the rate of learning and characteristics of the technologies, the nature of markets, and management approaches. The author concludes that (1) rates of improvement are dominated by technological factors, including the complexity of the basic production process and the type of chemical product, i.e., its phase (solid, liquid, or gas) and whether it is a primary or secondary chemical; and (2) there is no relationship between improvement slopes and market factors such as industry concentration or the rate of market expansion, except for the obvious finding that improvement is more rapid in rapidly expanding markets.

This report is part of the RAND Corporation report series. The report was a product of the RAND Corporation from 1948 to 1993 that represented the principal publication documenting and transmitting RAND's major research findings and final research.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.