In this paper, we solve the problem of optimal control of products diffusion by quality in a context of monopolistic competition. To do so, we introduce a dynamic demand function leaning on two hypotheses: first, price acts a signal of quality; second, demand is more sensitive to quality than to price. Using the maximum principle of Pontryagin, we then characterize the optimal dynamic trajectory of quality and its qualitative properties. (C) 1998 Elsevier Science B.V.