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Mixed oligopoly, cost-reducing research and development, and privatisation

Maria José Gil-Moltó, Joanna Poyago-Theotoky, José Rodrigues-Neto and Vasileios Zikos ()

European Journal of Operational Research, 2020, vol. 283, issue 3, 1094-1106

Abstract: We develop a mixed oligopoly model to examine the role of R&D subsidies and evaluate the welfare effects of privatisation. In solving the oligopoly model we propose a novel use of aggregative games techniques. Our analysis reveals that privatisation reduces the optimal R&D subsidy. Furthermore, privatisation improves social welfare but only when the number of firms is sufficiently large. Implementing solely a subsidy to R&D does not lead to a ‘privatisation neutrality theorem’ or ‘irrelevance result’.

Keywords: Game theory; Mixed oligopoly; Aggregative games techniques; Privatisation; R&D (search for similar items in EconPapers)
JEL-codes: C72 L13 L32 L33 O38 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:283:y:2020:i:3:p:1094-1106

DOI: 10.1016/j.ejor.2019.11.071

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