Recent price trends and learning curves for household LED lamps from a regression analysis of Internet retail data

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In recent years, household LED light bulbs (LED A lamps) have undergone a dramatic price decline. Since late 2011, we have been collecting weekly data on retail offerings of LED A lamps on the Internet. The resulting data set allows us to track the recent price decline in detail. This report extends and improves upon a previous report, released in 2014, by developing a regression model that accounts for the effects on lamp price of time, lumen output, brand, retailer, and color temperature. Significant effects on price are observed with time, lumen output, brand and retailer. If brand-name effects are ignored as price predictors, we find that LED A lamps declined in price by 32% per year between 2011 and 2015, after controlling for lumen and retailer effects. If we also control for brand-name effects the rate of price decline drops to 28% per year, suggesting that a portion of the price decline has been driven by competition among the many brands that have entered the market in recent years. If we attribute the remaining price decline to technological learning, we can combine the rate of price decline with public data on the growth in LED A lamp shipments to yield a power-law experience curve relating price to cumulative shipments. From this, we estimate that LED A lamp prices have recently fallen by 18% for each doubling in cumulative production.

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