Pricing and price development in a dynamic environment in case of corporate learning

Abstract

Routines gained from production experience may play an important role in certain stages of a firm's life. Among the variations of organizational learning, our study focuses on the process of learning by doing (learning-by-doing), paying also special attention to organizational forgetting. Despite the fact that many authors have already dealt with this issue in the literature, it is still a rich field that deserves further analysis and exploration, to which we also wish to contribute. For this purpose, we analyze a continuous-time model using optimal control theory. In the model, the unit price of the product (p >= 0) is the decision variable, while the experience of cumulative production (z) is the state variable.