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R&D versus output subsidies in mixed markets

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  • Kesavayuth, Dusanee
  • Zikos, Vasileios

Abstract

We analyse the relative welfare effects of an R&D and an output subsidy in a mixed duopoly. We show that an R&D subsidy is beneficial for society as a whole, and socially superior to an output subsidy, when spillovers are sufficiently high. Otherwise, an output subsidy is socially superior.

Suggested Citation

  • Kesavayuth, Dusanee & Zikos, Vasileios, 2013. "R&D versus output subsidies in mixed markets," Economics Letters, Elsevier, vol. 118(2), pages 293-296.
  • Handle: RePEc:eee:ecolet:v:118:y:2013:i:2:p:293-296
    DOI: 10.1016/j.econlet.2012.11.017
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    References listed on IDEAS

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    1. Anderson, Simon P. & de Palma, Andre & Thisse, Jacques-Francois, 1997. "Privatization and efficiency in a differentiated industry," European Economic Review, Elsevier, vol. 41(9), pages 1635-1654, December.
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    9. 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.
    10. Susumu Cato, 2011. "Privatization Policy And Cost‐Reducing Investment By The Private Sector," Manchester School, University of Manchester, vol. 79(6), pages 1157-1178, December.
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    Citations

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    Cited by:

    1. Chen, Jiaqi & Lee, Sang-Ho, 2020. "Endogenous timing game with R&D decisions and output subsidies," MPRA Paper 99503, University Library of Munich, Germany.
    2. Dusanee Kesavayuth & Vasileios Zikos, 2016. "Price or Quantity? A New Irrelevance Result for Mixed Markets," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 29-42, March.
    3. Juan Carlos Bárcena‐Ruiz & María Begoña Garzón, 2020. "Disclosure of R&D knowledge in a mixed duopoly," Manchester School, University of Manchester, vol. 88(4), pages 584-598, July.
    4. Yoon, Jeong & Choi, Kangsik, 2018. "Why do export subsidies still exist? R&D and output subsidies," Japan and the World Economy, Elsevier, vol. 45(C), pages 30-38.
    5. Marie-Laure Cabon-Dhersin & Romain Gibert, 2019. "R&D cooperation, proximity and distribution of public funding between public and private research sectors," Working Papers hal-02006489, HAL.
    6. Lee, Sang-Ho & Muminov, Timur K. & Tomaru, Yoshihiro, 2017. "Partial Privatization And Subsidization In A Mixed Duopoly: R&D Versus Output Subsidies," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 58(2), pages 163-177, December.
    7. Lee, Sang-Ho & Muminov, Timur, 2017. "R&D Output Sharing in a Mixed Duopoly and Incentive Subsidy Policy," MPRA Paper 81732, University Library of Munich, Germany.
    8. Lee, Sang-Ho & Park, Chul-Hi, 2020. "Environmental Regulations in Private and Mixed Duopolies: Emission Taxes versus Green R&D Subsidies," MPRA Paper 98833, University Library of Munich, Germany.
    9. Lee, Sang-Ho & Tomaru, Yoshihiro, 2017. "Output and R&D subsidies in a mixed oligopoly," MPRA Paper 84410, University Library of Munich, Germany.
    10. Shoji Haruna & Rajeev K. Goel, 2017. "Output subsidies in mixed oligopoly with research spillovers," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 41(2), pages 235-256, April.
    11. Dusanee Kesavayuth & Sang-Ho Lee & Vasileios Zikos, 2018. "Merger and Innovation Incentives in a Differentiated Industry," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 25(2), pages 207-221, May.
    12. Lee, Sang-Ho & Muminov, Timur, 2020. "Endogenous Timing of R&D Decisions and Privatization Policy with Research Spillovers," MPRA Paper 98832, University Library of Munich, Germany.
    13. Marie-Laure Cabon-Dhersin & Romain Gibert, 2017. "Cooperation or non-cooperation in R&D: how should research be funded? ," Working Papers hal-01587014, HAL.
    14. Basak, Debasmita & Wang, Leonard F.S., 2019. "Cournot vs. Bertrand in mixed markets with R&D," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 265-271.
    15. Gamal Atallah, 2019. "Subsidiar innovación y producción," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 42(84), pages 9-35.
    16. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2019. "Sequencing R&D decisions with a consumer-friendly firm and spillovers," MPRA Paper 95642, University Library of Munich, Germany.
    17. Gil-Moltó, Maria José & Poyago-Theotoky, Joanna & Rodrigues-Neto, José A. & Zikos, Vasileios, 2020. "Mixed oligopoly, cost-reducing research and development, and privatisation," European Journal of Operational Research, Elsevier, vol. 283(3), pages 1094-1106.
    18. Haruna Shoji & Goel Rajeev K., 2016. "International Tariffs in a Mixed Oligopoly with Research Spillovers," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(3), pages 277-293, August.
    19. Marie-Laure Cabon-Dhersin & Romain Gibert, 2018. "Cooperation or non-cooperation in R&D: how should research be funded?," Post-Print hal-02006515, HAL.
    20. Lee, Sang-Ho & Muminov, Timur & Chen, Jiaqi, 2019. "Timing of R&D Decisions and Output Subsidies in a Mixed Duopoly with Spillovers," MPRA Paper 91452, University Library of Munich, Germany.
    21. Lee, Sang-Ho & Muminov, Timur, 2020. "R&D Spillovers and Welfare Effect of Privatization with an R&D Subsidy," MPRA Paper 99937, University Library of Munich, Germany.
    22. Lee, Sang-Ho & Muminov, Timur, 2020. "Partial privatization and subsidization in a time-consistent policy: output versus R&D subsidies," MPRA Paper 99861, University Library of Munich, Germany.

    More about this item

    Keywords

    R&D subsidies; Output subsidies; Mixed duopoly; Spillovers;

    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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