The dynamics of incremental costs of efficient television display technologies

We study the evolution of the incremental cost and price of efficiency for televisions in the U.S. market. We focus on televisions due to their rapid technological evolution and large number of annual shipments, such that costs and prices evolve on short timescales as compared to other consumer durable goods. Using the experience curve approach, we compare manufacturing costs and selling prices of two liquid crystal display (LCD) technologies. We find a mean experience rate of 27% for less efficient cold cathode fluorescent lamp LCD televisions and 14% for more efficient light emitting diode LCD televisions, using price data. This corresponds to an annual decline of approximately 17% per year in price for both television types. Our results also suggest that the incremental cost or price of efficiency, holding other major features constant, declines much more rapidly than the baseline cost or price. We find that the incremental cost or price declines at roughly 50% per year. The fitted parameters do depend on the specific technology modeled, as well as on whether cost or price data are used. Our results for LCD televisions are qualitatively similar to other display technologies, even very mature ones, suggesting that the cost and price decline extends many years after a technology is considered mature. We also analyze the selling prices of ENERGY STAR® and non-ENERGY STAR televisions, which support our main findings. These results highlight the consumer benefits of efficient display technologies, and how the dynamics of incremental costs differ from baseline costs.