Product innovation, process innovation and advertising-based goodwill: A dynamic analysis in a monopoly

<p style='text-indent:20px;'>In this paper, we develop a dynamic control model to investigate monopolist's investment strategies in product innovation, process innovation and advertising-based goodwill. The significant features of our study are: (ⅰ) considering the effect quality on goodwill; (ⅱ) instantaneous cost producing using machinery and/or skilled labour; (ⅲ) customers' demand function depends quality, price goodwill separable multiplicative way between state variables variables. Our results suggest that system admits unique saddle-point steady-state equilibrium under monopolist optimum social optimum; will have an underinvestment problem as compared with planner; although is still determined by planner optimum, higher than optimum.</p>