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Innovation and Competition in a Mixed Oligopoly

Marc Escrihuela-Villar () and Jorge Guillén ()
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Jorge Guillén: Escuela de Administración de Negocios para Graduados (ESAN)

Hacienda Pública Española / Review of Public Economics, 2020, vol. 234, issue 3, 59-74

Abstract: We consider a mixed quantity-setting oligopoly where firms can innovate to reduce their marginal cost of production. Besides, private firms may also reduce output competition through a collusive agreement. In this context, we obtain that collusion incentives are weaker due to R&D activities. We also investigate two different regulatory measures; (possibly partial) privatization and an output subsidy. In the latter case, we obtain that when firms innovate, the privatization neutrality result is not satisfied. Furthermore, a proper policy should include a partial privation where less competition between private firms calls for a weaker privatization scheme.

Keywords: Imperfect competition; mixed oligopoly; partial privatization; innovation; subsidies. (search for similar items in EconPapers)
JEL-codes: D43 L11 L13 L52 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:hpe:journl:y:2020:v:234:i:3:p:59-74