In this paper, I solve the problem of an optimal control of innovations diffusion both by advertising and quality. To do so, I introduce a dynamic demand function leaning on two hypotheses : first, price seems to be a signal of quality , second, demand is more sensitive to quality than to price. Using the maximum principle of Pontryagin, I then characterize the optimal dynamic trajectories of quality, advertising and price, and their qualitative properties.
EL OUARDIGHI, F. (1996). Quality, Advertising, Price and the Diffusion of Innovations. ESSEC Business School.