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Output subsidies in mixed oligopoly with research spillovers

Author

Listed:
  • Shoji Haruna

    (Okayama University)

  • Rajeev K. Goel

    (Illinois State University)

Abstract

Output subsidies have been proposed as a policy to rectify inefficiencies in mixed markets with public and private firms. This paper adds to the literature on mixed oligopolies by examining the behavior of firms, with research spillovers, and the government subsidizes output. A key finding is that output subsidies, unlike R&D subsidies, do not necessarily attain efficient resource allocation. Output subsidies are justified only at relatively low R&D spillovers. The rankings of optimal output subsidies, output and profits under alternate scenarios are significantly affected by spillovers. Social welfare ranking, on the other hand, is independent of spillovers, and welfare is largest under R&D competition.

Suggested Citation

  • 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.
  • Handle: RePEc:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9346-2
    DOI: 10.1007/s12197-015-9346-2
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    Cited by:

    1. Jiaqi Chen & Sang-ho Lee, 2022. "R&D rivalry with the interaction of output subsidies in an extensive endogenous timing game," Economics Bulletin, AccessEcon, vol. 42(3), pages 1621-1630.
    2. Chen, Jiaqi & Lee, Sang-Ho, 2020. "Endogenous timing game with R&D decisions and output subsidies," MPRA Paper 99503, University Library of Munich, Germany.
    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. Jiaqi Chen & Sang-Ho Lee & Timur K. Muminov, 2021. "Welfare-reducing discriminatory output subsidies with mixed ownership and R&D," Economics Bulletin, AccessEcon, vol. 41(3), pages 1592-1602.
    5. Li, Mingzhi & Lien, Jaimie W. & Zheng, Jie, 2021. "Optimal subsidies in the competition between private and state-owned enterprises," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1235-1244.
    6. Sang-Ho Lee & Timur K. Muminov, 2021. "Endogenous Timing of R&D Decisions and Privatization Policy with Research Spillovers," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 505-525, December.
    7. Jiaqi Chen & Sang‐Ho Lee & Timur K. Muminov, 2022. "R&D spillovers, output subsidies, and privatization in a mixed duopoly: Flexible versus irreversible R&D investments," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 879-899, July.
    8. 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.
    9. Chen, Jiaqi & Lee, Sang-ho & Muminov, Timur K., 2019. "Time-inconsistent Output Subsidy/Tax Policies in Free-entry Mixed Markets," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 61-77, June.
    10. 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.
    11. Sang‐Ho Lee & Timur K. Muminov, 2021. "R&D Information sharing in a mixed duopoly and incentive subsidy for research joint venture competition," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 154-170, April.
    12. Shoji Haruna & Rajeev K. Goel, 2019. "Optimal pollution control in a mixed oligopoly with research spillovers," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 21-40, March.
    13. 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.
    14. 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.

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    More about this item

    Keywords

    Mixed oligopoly; R&D; Spillovers; Output subsidy;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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