We characterize the optimal policy-mix towards R&D activity and output production in the simultaneous moves mixed and private duopolies, as well as in the Stackelberg mixed duopoly. Our findings suggest that the government will opt for implementing jointly a tax on R&D with a subsidy on output to tackle the underlying market failures. Moreover, the optimal output subsidy, R&D investment, output and welfare are identical irrespective of whether the public firm: (i) moves simultaneously with the private firm, (ii) is Stackelberg leader in R&D and/or output, or (iii) is privatized and acts simultaneously with the private firm to maximize profits. Privatization reduces the optimal tax on R&D, but leads to an increase in firms' profits. Finally, Stackelberg output leadership by the public firm induces an increase in R&D taxation, which is accompanied by a decrease in profits.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.
Find related papers by JEL classification: L0 - Industrial Organization - - General L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: