Autonomous and induced production learning under price and quality competition

Konstantin Kogan, Fouad El Ouardighi

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


Recent empirical studies indicate that improvements in product conformance quality exhibit learning-by-doing patterns. We address quality improvement in a competitive duopoly market for partially substitutable products characterized by levels of quality that are not necessarily identical. The products’ quality is described with a hazard rate that can be improved both by accumulating production experience (autonomous learning) and quality improvement efforts (induced learning). Given that defective items are fully reimbursable and the demands exhibit increasing returns to scale, we derive Nash equilibrium pricing and induced learning effort dynamic policies. We show that when the effectiveness of autonomous learning prevails over the effectiveness of efforts in induced learning, equilibrium prices gradually grow over time; the trend is quite the opposite when autonomous learning is less effective than induced learning.

Original languageEnglish
Pages (from-to)74-84
Number of pages11
JournalApplied Mathematical Modelling
StatePublished - Mar 2019

Bibliographical note

Publisher Copyright:
© 2018 Elsevier Inc.


  • Conformance quality
  • Learning by doing
  • Price and quality competition
  • Production dynamics


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