R&D Subsidies, Spillovers and Privatization in Mixed Markets
AbstractWe examine the use of subsidies to R&D in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is increasing in the degree of spillovers but it is lower in the private duopoly. The optimal R&D subsidy leads to an increase in total R&D and production, however, it does not lead to the equalisation of per firm output and therefore to an efficient distribution of production costs. We also find that privatization of the public firm reduces R&D activity and welfare in the duopoly market. This result stands even when optimal R&D subsidies are provided.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 10/19.
Date of creation: Jul 2010
Date of revision:
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Postal: Department of Economics University of Leicester, University Road. Leicester. LE1 7RH. UK
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Other versions of this item:
- Maria José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2011. "R&D Subsidies, Spillovers, and Privatization in Mixed Markets," Southern Economic Journal, Southern Economic Association, vol. 78(1), pages 233-255, July.
- Maria José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2010. "R&D Subsidies, Spillovers and Privatization in Mixed Markets," CRIEFF Discussion Papers, Centre for Research into Industry, Enterprise, Finance and the Firm 1008, Centre for Research into Industry, Enterprise, Finance and the Firm.
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
- O38 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-31 (All new papers)
- NEP-COM-2010-07-31 (Industrial Competition)
- NEP-INO-2010-07-31 (Innovation)
- NEP-SBM-2010-07-31 (Small Business Management)
- NEP-TID-2010-07-31 (Technology & Industrial Dynamics)
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.:
- de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 4(1), pages 1-17.
- 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.
- Joanna Poyago-Theotoky, 2001. "Mixed oligopoly, subsidization and the order of firms' moves: an irrelevance result," Economics Bulletin, AccessEcon, vol. 12(3), pages 1-5.
- Saha, Souresh, 2014. "Firm's objective function and product and process R&D," Economic Modelling, Elsevier, Elsevier, vol. 36(C), pages 484-494.
- Kesavayuth, Dusanee & Zikos, Vasileios, 2013. "R&D versus output subsidies in mixed markets," Economics Letters, Elsevier, Elsevier, vol. 118(2), pages 293-296.
- Matsumura, Toshihiro & Okumura, Yasunori, 2013. "Privatization neutrality theorem revisited," Economics Letters, Elsevier, Elsevier, vol. 118(2), pages 324-326.
- Matsumura, Toshihiro & Sunada, Takeaki, 2013. "Advertising competition in a mixed oligopoly," Economics Letters, Elsevier, Elsevier, vol. 119(2), pages 183-185.
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