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Product and process innovation with knowledge accumulation in monopoly: A dynamic analysis

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  • Zhong, Genyuan
  • Zhang, Weihang

Abstract

In this paper, we investigate monopolist optimal investment levels using a dynamic model under knowledge accumulation. We show that (i) investment decisions in product and process innovation are independent of each other; (ii) under both the monopolist and the social optimum, there exist the saddle stable steady state equilibria; (iii) Optimal investment levels in product and process innovation positive response to learning rate and knowledge accumulation rate, inversely response to knowledge depreciation rate.

Suggested Citation

  • Zhong, Genyuan & Zhang, Weihang, 2018. "Product and process innovation with knowledge accumulation in monopoly: A dynamic analysis," Economics Letters, Elsevier, vol. 163(C), pages 175-178.
    • Handle: RePEc:eee:ecolet:v:163:y:2018:i:c:p:175-178
    DOI: 10.1016/j.econlet.2017.12.016
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    References listed on IDEAS

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    1. Chenavaz, Régis, 2012. "Dynamic pricing, product and process innovation," European Journal of Operational Research, Elsevier, vol. 222(3), pages 553-557.
    2. Zvi Griliches, 1998. "R&D and Productivity: The Unfinished Business," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 269-283, National Bureau of Economic Research, Inc.
    3. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    4. Li, Shoude & Ni, Jian, 2016. "A dynamic analysis of investment in process and product innovation with learning-by-doing," Economics Letters, Elsevier, vol. 145(C), pages 104-108.
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    Cited by:

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    2. De Giovanni, Pietro & Zaccour, Georges, 2023. "A survey of dynamic models of product quality," European Journal of Operational Research, Elsevier, vol. 307(3), pages 991-1007.
    3. Ni, Jian & Zhao, Jun & Chu, Lap Keung, 2021. "Supply contracting and process innovation in a dynamic supply chain with information asymmetry," European Journal of Operational Research, Elsevier, vol. 288(2), pages 552-562.
    4. Dongdong Li & Leonard F. S. Wang, 2022. "Does environmental corporate social responsibility (ECSR) promote green product and process innovation?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(5), pages 1439-1447, July.
    5. Ni, Jian & Xu, Yue & Shi, Jia & Li, Jiali, 2024. "Product innovation in a supply chain with information asymmetry: Is more private information always worse?," European Journal of Operational Research, Elsevier, vol. 314(1), pages 229-240.
    6. Yue Liu, 2024. "Relationship between innovation intensity and different types of innovation performance: moderating effect of environmental uncertainty," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(11), pages 28971-28994, November.
    7. Jürgen Antony & Torben Klarl, 2020. "Knowledge Transfer, Transitional Dynamics and Optimal Research & Development Policy in a Dynamic Monopoly Setting," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 57(3), pages 579-606, November.

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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