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Product and process innovation with knowledge accumulation in monopoly: A dynamic analysis

Author:
Zhong, Genyuan, Zhang, Weihang
Source:
Economics letters 2018 v.163 pp. 175-178
ISSN:
0165-1765
Subject:
dynamic models, learning, monopoly
Abstract:
In this paper, we investigate monopolist optimal investment levels using a dynamic model under knowledge accumulation. We show that (i) investment decisions in product and process innovation are independent of each other; (ii) under both the monopolist and the social optimum, there exist the saddle stable steady state equilibria; (iii) Optimal investment levels in product and process innovation positive response to learning rate and knowledge accumulation rate, inversely response to knowledge depreciation rate.
Agid:
6101280