What does it mean for a technology to follow Wright's Law?

Summary

Learning curves: What does it mean for a technology to follow Wright’s Law?Technologies that follow Wright’s Law get cheaper at a consistent rate, as the cumulative production of that technology increases.Technologies that follow Wright’s Law get cheaper at a consistent rate, as the cumulative production of that technology increases.The best way to explain what this means is to look at a concrete example.Solar technology: an example of a technology that follows Wright’s LawThe time series in the chart shows the deployment of solar panels on the horizontal axis and the price of solar panels on the vertical axis. The orange line that describes the relationship between these two metrics over time is called the learning curve of that technology.As the cumulative installed capacity increased, the price of solar declined exponentially. Solar technology is a prime example. For more than four decades, the price of solar panels declined by 20% with each doubling of global cumulative capacity.The fact that both metrics changed exponentially can be nicely seen in this chart because both axes are logarithmic. On a logarithmic axis, a measure that declines exponentially follows a straight line.That more production leads to falling prices is not surprising – such ‘economies of scale’ are found in the production of many goods. If you are already making one pizza, making a second one isn’t that much extra work.What is exceptional about technologies that follow a learning curve is that this effect persists, and the rate at which the price declines stays roughly constant. This is what it means for a technology to follow Wright’s Law.The relationship between the laws of Gordon Moore and Theodore Paul WrightSolar power is not the only technology where we see trends of exponential change. The most famous case of exponential technological change is Moore’s Law – the observation of Intel’s co-founder Gordon Moore who noticed that the number of transistors on microprocessors doubled every ...