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Innovation and Competition in a Mixed Oligopoly

Author

Listed:
  • Marc Escrihuela-Villar

    (Universitat de les Illes Balears)

  • Jorge Guillén

    (Escuela de Administración de Negocios para Graduados (ESAN))

Abstract

We consider a mixed quantity-setting oligopoly where firms can innovate to reduce their marginal cost of production. Besides, private firms may also reduce output competition through a collusive agreement. In this context, we obtain that collusion incentives are weaker due to R&D activities. We also investigate two different regulatory measures; (possibly partial) privatization and an output subsidy. In the latter case, we obtain that when firms innovate, the privatization neutrality result is not satisfied. Furthermore, a proper policy should include a partial privation where less competition between private firms calls for a weaker privatization scheme.

Suggested Citation

  • Marc Escrihuela-Villar & Jorge Guillén, 2020. "Innovation and Competition in a Mixed Oligopoly," Hacienda Pública Española / Review of Public Economics, IEF, vol. 234(3), pages 59-74, September.
    • Handle: RePEc:hpe:journl:y:2020:v:234:i:3:p:59-74
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    More about this item

    Keywords

    Imperfect competition; mixed oligopoly; partial privatization; innovation; subsidies.;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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