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PARTIAL PRIVATIZATION IN A MIXED DUOPOLY WITH AN R&D RIVALRY

John Heywood and Guangliang Ye

Bulletin of Economic Research, 2009, vol. 61, issue 2, 165-178

Abstract: This paper is the first to examine the incentive for partial privatization in a mixed duopoly with R&D rivalry. We show that because mixed duopolies engage in more R&D, the optimal extent of privatization is unambiguously reduced. Yet, this reduction is often very modest. Adopting the extent of privatization that would be optimal if one ignored the R&D rivalry routinely results in greater welfare than retaining a fully public firm and ignoring partial privatization. Only when R&D has an extremely low cost would it be preferable to ignore partial privatization.

Date: 2009
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Citations: View citations in EconPapers (43)

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https://doi.org/10.1111/j.1467-8586.2008.00301.x

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