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Endogenous Timing of R&D Decisions and Privatization Policy with Research Spillovers

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  • Lee, Sang-Ho
  • Muminov, Timur

Abstract

This study investigates an endogenous R&D timing game between duopoly firms which undertake cost-reducing R&D investments and then play Cournot output competition. We examine equilibrium outcomes in private and mixed markets and find that spillovers rate critically affects contrasting results. We show that a simultaneous-move appears in a private duopoly only if the spillovers rate is low while a sequential-move appears in a mixed duopoly irrespective of spillovers. We also show that public leadership is the only equilibrium if the spillovers rate is intermediate and its resulting welfare is the highest. Finally, we show that the implementation of privatization policy transforms a public leader to a private competitor, but this can decrease the social welfare.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:98832
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    Cited by:

    1. Chul‐Hi Park & Sang‐Ho Lee, 2023. "Emission taxation, green R&D, and managerial delegation contracts with environmental and sales incentives," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2366-2377, June.
    2. Xing Gao & Xifan Wang & Weijun Zhong & Ying Wang, 2023. "R&D subsidy and output subsidy in a duopoly: The role of technology spillover and R&D budget," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 524-538, September.

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    More about this item

    Keywords

    private duopoly; mixed duopoly; R&D spillovers; endogenous R&D timing game;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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