R&D Subsidies, Spillovers and Privatization in Mixed Markets

Maria Gil Molto, Joanna Poyago.Theotoky and Vasileios Zikos
Authors registered in the RePEc Author Service: Joanna Poyago-Theotoky

No 10/19, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: We 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.

Keywords: mixed duopoly; process innovation; R&D subsidies; privatization; spillovers. (search for similar items in EconPapers)
JEL-codes: L13 L31 L32 L50 O38 (search for similar items in EconPapers)
Date: 2010-07
New Economics Papers: this item is included in nep-com, nep-ino, nep-sbm and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Journal Article: R&D Subsidies, Spillovers, and Privatization in Mixed Markets (2011)
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