Dynamic pricing, product and process innovation
The question of simultaneous dynamic pricing, product and process investment policies is crucial for manufacturing and high-tech industries. This paper models these policies in an optimal control setting. On the supply side, the firm sets prices, product and process investment levels over time. On the demand side, current demand depends on price and quality. Under an additive separable demand function, dynamic pricing increases with quality and cost. Therefore, both product innovation and process innovation impact the pricing policy. Under a multiplicative separable demand function, dynamic pricing policy follows the dynamic of production cost and is independent of the evolution of product quality. Thus, process innovation is the main determinant of a firm’s pricing policy over time and product innovation has no impact.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dosi, Giovanni, 1982.
"Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change,"
Elsevier, vol. 11(3), pages 147-162, June.
- Dosi, Giovanni, 1993. "Technological paradigms and technological trajectories : A suggested interpretation of the determinants and directions of technical change," Research Policy, Elsevier, vol. 22(2), pages 102-103, April.
- Shlomo Kalish, 1983. "Monopolist Pricing with Dynamic Demand and Production Cost," Marketing Science, INFORMS, vol. 2(2), pages 135-159.
- Sahal, Devendra, 1985. "Technological guideposts and innovation avenues," Research Policy, Elsevier, vol. 14(2), pages 61-82, April.
- Andrea Mantovani, 2006.
"Complementarity between product and process innovation in a monopoly setting,"
Economics of Innovation and New Technology,
Taylor & Francis Journals, vol. 15(3), pages 219-234.
- A. Mantovani, 2005. "Complementarity between Product and Process innovation in a Monopoly Setting," Working Papers 533, Dipartimento Scienze Economiche, Universita' di Bologna.
- Susan Athey & Armin Schmutzler, 1995. "Product and Process Flexibility in an Innovative Environment," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 557-574, Winter.
- Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-83, June.
- Lambertini, Luca & Mantovani, Andrea, 2009.
"Process and product innovation by a multiproduct monopolist: A dynamic approach,"
International Journal of Industrial Organization,
Elsevier, vol. 27(4), pages 508-518, July.
- L. Lambertini & A. Mantovani, 2005. "Process and Product Innovation by a Multiproduct Monopolist: A Dynamic Approach," Working Papers 551, Dipartimento Scienze Economiche, Universita' di Bologna.
- Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
- repec:cai:reidbu:rei_135_0089 is not listed on IDEAS
- Ron Adner & Daniel Levinthal, 2001. "Demand Heterogeneity and Technology Evolution: Implications for Product and Process Innovation," Management Science, INFORMS, vol. 47(5), pages 611-628, May.
- Teng, Jinn-Tsair & Thompson, Gerald L., 1996. "Optimal strategies for general price-quality decision models of new products with learning production costs," European Journal of Operational Research, Elsevier, vol. 93(3), pages 476-489, September.
When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:222:y:2012:i:3:p:553-557. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.