PARTIAL PRIVATIZATION AND SUBSIDIZATION IN A MIXED DUOPOLY: R&D VERSUS OUTPUT SUBSIDIES
Sang-Ho Lee (),
Timur Muminov () and
Yoshihiro Tomaru ()
Hitotsubashi Journal of Economics, 2017, vol. 58, issue 2, 163-177
This study investigates R&D and output subsidies in a mixed duopoly with partial privatization. We show that an output subsidy is welfare-superior to an R&D subsidy policy, but the government has a higher incentive to privatize the public firm under the output subsidy than the R&D subsidy. We also show that when the government uses the policy mix of R&D and output subsidies together, it can achieve the first-best allocation, in which the degree of privatization does not influence output subsidies but influences R&D subsidies.
Keywords: mixed duopoly; partial privatization; R&D subsidy; output subsidy (search for similar items in EconPapers)
JEL-codes: L13 L32 H21 (search for similar items in EconPapers)
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Working Paper: Partial Privatization and Subsidization in a Mixed Duopoly: R&D versus Output Subsidies (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:58:y:2017:i:2:p:163-177
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