Online reviews have a profound impact on firm’s pricing and quality strategies. However, consumer self-selection bias may distort review information and mislead firm’s decisions. This study incorporates consumer self-selection bias into the review generation mechanism and develops a two-period dynamic model to examine firm’s optimal product line strategies. Specifically, we analyze three scenarios—without reviews, with objective reviews, and with positively or negatively biased reviews—to derive the optimal decisions and evaluate their effects on firm profit and consumer surplus. The results show that (1) objective reviews do not affect initial product release decisions; negative self-selection bias induces firm to increase quality and reduce price, while positive bias has the opposite effect; (2) the direction and intensity of bias, product experience quality, and production cost jointly determine firm’s product line strategies; and (3) the effects of reviews on firm profit and consumer surplus are not one-directional: under different bias and cost conditions, reviews may either enhance both outcomes or intensify their divergence. Only when negative bias is weak or positive bias exists, and production cost is relatively high, can firm and consumers simultaneously benefit, achieving a “win–win” outcome. This study reveals how online reviews shapes firm’s dynamic product decisions and offers insights for pricing, quality iteration, and review management.