As Elon Musk's Tesla ramps up production of the Model 3, will the firm enjoy large learning by doing gains in productivity (and lower costs due to "pin factory" specialization by parts suppliers due to economies of scale) or will quality decline due to the "big rush"?  Do serious IO economists have a prediction to make here regarding whether there is a quantity vs. quality tradeoff in differentiated product markets for new goods.

Recall the WW 2 battleship case.

Thompson P. How much did the liberty shipbuilders learn? New evidence for an old case study. Journal of Political Economy. 2001 Feb;109(1):103-37.


"This paper offers some new estimates of the contribution of learning to the rapid increases in labor productivity observed in the construction of Liberty ships during World War II. The study exploits new data on physical capital investment and vessel quality constructed from contemporary records held at the National Archives. Estimates of the rate of learning are shown to be sensitive to the inclusion of the new capital data, and data on vessel quality provide evidence that part of the measured productivity increases were secured at the expense of quality. "

This abstract suggests that Musk faces a quantity vs. quality tradeoff.

Here is a new paper by Walker Hanlon on this broad issue.