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Dynamic quality policies with reference quality effects

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  • Régis Chenavaz

Abstract

Dynamic pricing policies with reference-price demand have been intensely analysed. Less studied are dynamic quality policies with reference-quality demand. This article studies the dynamic quality policy of a firm whose consumers use a reference point in their decision-making, in line with the principles of behavioural economics. More specifically, I consider reference quality formation in an optimal control setting. By solving on the basis of Pontryagin’s maximum principle, I obtain analytical solutions to the optimal quality policy. The managerial implications of quality reference for dynamic quality policy are discussed.

Suggested Citation

  • Régis Chenavaz, 2017. "Dynamic quality policies with reference quality effects," Applied Economics, Taylor & Francis Journals, vol. 49(32), pages 3156-3162, July.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:32:p:3156-3162
    DOI: 10.1080/00036846.2016.1254345
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    Cited by:

    1. Deqing Ma & Xue Wang & Jinsong Hu, 2022. "Platform Selling Mode Selection Considering Consumer Reference Effect in Carbon Emission Reduction," IJERPH, MDPI, vol. 20(1), pages 1-43, December.
    2. Chenavaz, Régis & Paraschiv, Corina, 2018. "Dynamic pricing for inventories with reference price effects," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 12, pages 1-16.
    3. Chenavaz, Régis Y. & Feichtinger, Gustav & Hartl, Richard F. & Kort, Peter M., 2020. "Modeling the impact of product quality on dynamic pricing and advertising policies," European Journal of Operational Research, Elsevier, vol. 284(3), pages 990-1001.
    4. Zhichao Zhang & Qing Zhang & Zhi Liu & Xiaoxue Zheng, 2018. "Static and Dynamic Pricing Strategies in a Closed-Loop Supply Chain with Reference Quality Effects," Sustainability, MDPI, vol. 10(1), pages 1-31, January.
    5. Zhou Xideng & Xu Bing & Xie Fei & Li Yu, 2020. "Research on Quality Decisions and Coordination with Reference Effect in Dual-Channel Supply Chain," Sustainability, MDPI, vol. 12(6), pages 1-23, March.
    6. Régis Chenavaz & Sajjad M. Jasimuddin, 2017. "An analytical model of the relationship between product quality and advertising," Post-Print hal-01685892, HAL.
    7. Jun Wang & Xianxue Cheng & Xinyu Wang & Hongtao Yang & Shuhua Zhang, 2019. "Myopic versus Farsighted Behaviors in a Low-Carbon Supply Chain with Reference Emission Effects," Complexity, Hindawi, vol. 2019, pages 1-15, February.
    8. Rezaee Vessal, Sara & De Giovanni, Pietro & Hassanzadeh, Alborz, 2022. "Technology and service investments in the presence of feature fatigue and word-of-mouth," European Journal of Operational Research, Elsevier, vol. 301(3), pages 923-941.
    9. Deqing Ma & Jinsong Hu & Weihao Wang, 2021. "Differential game of product–service supply chain considering consumers’ reference effect and supply chain members’ reciprocity altruism in the online-to-offline mode," Annals of Operations Research, Springer, vol. 304(1), pages 263-297, September.

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