Are the public firms more innovative than the private ones?
AbstractThis paper shows that the public firms can be more innovative and, thus, more efficient than the private firms. To verify this conclusion, a mixed duopoly is considered that allows both the public firm and the private firm to adopt a new technology with a positive fixed cost that reduces the marginal cost of production. The private firm maximizes profits while the public firm maximizes the weighed sum of the consumer and producer surpluses. In this framework, it is shown that if the cost of setting up a new technology takes an intermediate value when the weight of the consumer surplus in social welfare is high enough, the public firm is more innovative than the private one. Moreover, there is at least as much innovation in a mixed duopoly as in a private duopoly if the cost of setting up a new technology is high enough.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Prague Economic Papers.
Volume (Year): 2008 (2008)
Issue (Month): 2 ()
Postal: Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
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.:
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- Poyago-Theotoky, Joanna, 1998. "R&D Competition in a Mixed Duopoly under Uncertainty and Easy Imitation," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 415-428, September.
- Vining, Aidan R & Boardman, Anthony E, 1992. " Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
- Bos, Dieter & Peters, Wolfgang, 1995. "Double inefficiency in optimally organized firms," Journal of Public Economics, Elsevier, vol. 56(3), pages 355-375, March.
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