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 complement at equilibrium. We also perform the stability analysis, showing that a stable branch exists along the quality dimension only.
Process Innovation and Product Quality Improvement in a Dynamic Monopoly
LAMBERTINI, LUCA;ORSINI, RAIMONDELLO
2014
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 complement at equilibrium. We also perform the stability analysis, showing that a stable branch exists along the quality dimension only.File in questo prodotto:
Eventuali allegati, non sono esposti
I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
