Optimal pricing, production rate, and quality under learning effects

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

This study investigates the marketing and production problem for a monopolist firm where price, quality and production rate are simultaneous dynamic decision variables under the condition of a dynamic demand that depends on price, quality and cumulative sales. The formulated continuous profit maximization model follows the steps for dynamic optimization to derive optimal price, quality and production policies, wherein a unit production cost that decreases with cumulative production reflects the cost learning effect. Through the differentiable multiplicatively separable demand function, this study analyzes optimal trajectories for determining price, quality, and production rate. The results specify several optimal policies and policy makers would gain insight into the consequence of their decisions that otherwise might have been obscured by sub-optimal analysis.

Original languageEnglish
Pages (from-to)1152-1159
Number of pages8
JournalJournal of Business Research
Volume61
Issue number11
DOIs
Publication statusPublished - 2008 Nov 1

All Science Journal Classification (ASJC) codes

  • Marketing

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