A method for detecting a shift in a trend

This paper re-examines some frequently published (e.g. Conley, 1976; Henderson, 1979; Hax and Majluf, 1982; Stalk and Hout, 1990) price vs. cumulative production data for polyvinyl chloride. Using a new regression technique, the author shows that the resulting fitted curve captures the discontinuity of price change in this industry. Price reduction strategies are of great importance to high technology companies, and competitors' price changes may reflect underlying "learning curve" reductions in their manufacturing costs. Ordinary linear and nonlinear regression techniques are not suitable for estimating or summarizing a company's price reduction strategy. The technique used here is Phillips' (1989) piecewise linear regression.

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