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A dynamic analysis of a monopolist's efforts for improving product quality and process innovation with reference price effects under linear demand

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  • Genlong Guo
  • Shoude Li

Abstract

This paper examines a monopolist's innovation efforts for improving product quality and process innovation with reference price effects. Our main results show that the system can achieve saddle‐point steady‐state equilibrium; the two efforts increase with the increase of reference price; although the price is still determined by the monopolist, the price under the social planner regulation is higher than that under the monopolist decision‐making; there is always a negative relationship between the product quality and the price; and memory parameter affects the complementarity (substitutability) relationship between these two efforts.

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  • Genlong Guo & Shoude Li, 2023. "A dynamic analysis of a monopolist's efforts for improving product quality and process innovation with reference price effects under linear demand," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2328-2345, June.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:4:p:2328-2345
    DOI: 10.1002/mde.3820
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