A general method is developed for finding an optimal solution to the dynamic investment‐pricing problem of a publicly owned or regulated monopolistic enterprise with a technology of production exhibiting economies of scale given a market demand for the output of the enterprise that is sensitive to price. Previous authors have dealt successfully with the same capital investment problem under the assumption of completely inelastic demand; price has thereby been eliminated as a rationing device. The major significance of the general model developed here is that it combines the theory of welfare economics and the dynamic programing technique to solve the joint investment‐pricing problem under a particular, but not too restrictive, set of structural and procedural assumptions.