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Public Policy towards R&D in a Mixed Duopoly with Spillovers

Author

Listed:
  • María José Gil-Moltó

    (Dept of Economics, Loughborough University)

  • Joanna Poyago-Theotoky

    (Dept of Economics, Loughborough University)

  • Vasileios Zikos

    (Dept of Economics, Loughborough University)

Abstract

We investigate the use of subsidies to R&D, both in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is positive and increasing in the degree of spillovers both in the private and the mixed duopoly, although it is lower for the former than for the latter. We also find support for the empirical claim that privatization is followed by a scaling down of the R&D activity. A comparative static analysis of welfare levels suggests that privatization is welfare detrimental, which lends some support to the views against the widespread adoption of privatization programs.

Suggested Citation

  • María José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2006. "Public Policy towards R&D in a Mixed Duopoly with Spillovers," Discussion Paper Series 2006_17, Department of Economics, Loughborough University.
    • Handle: RePEc:lbo:lbowps:2006_17
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    File URL: http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/privatization_R&D.pdf
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    Citations

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    Cited by:

    1. Vasileios Zikos, 2007. "A Reappraisal of the Irrelevance result in mixed duopoly: A note on R&D competition," Economics Bulletin, AccessEcon, vol. 12(8), pages 1-6.
    2. repec:ebl:ecbull:v:12:y:2007:i:8:p:1-6 is not listed on IDEAS
    3. Vasileios Zikos, 2007. "Equilibrium and Optimal R&D Roles in a Mixed Market," Discussion Paper Series 2007_08, Department of Economics, Loughborough University, revised Mar 2007.

    More about this item

    Keywords

    mixed duopoly; process innovation; R&D subsidies; privatisation; spillovers.;
    All these keywords.

    JEL classification:

    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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