Process Innovation and Product Quality Improvement in a Dynamic Monopoly

Luca Lambertini () and R. Orsini

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We investigate the optimal R&D portfolio of a single-product monopolist investing in cost-reducing activities accompanied by efforts improving the quality of its product. There emerges that the firm s relative incentives along the two directions are conditional upon market affluency, measured by consumers willingness to pay for quality, and R&D efforts are complements at equilibrium. We also perform the stability analysis, showing that a stable branch exists along the quality dimension only.

JEL-codes: L12 O31 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-knm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp926

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