Regulating Innovative Activity: the Role of a Public Firm

Flavio Delbono and V. Denicolo'
Authors registered in the RePEc Author Service: Vincenzo Denicolo' ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: Without spillovers and under the winner-take-all hypothesis, there is overinvestment in R&D in a non cooperative equilibrium. This is due to the so-called common pool problem , i.e., duplication of efforts. We show that a public firm can represent a useful instrument in the hands of a policymaker to mitigate such a problem. More precisely, it is provided that, in a mixed duopoly: (i) each firm invest less than in a private duopoly, (ii) although the expected time of innovation is postponed, social welfare is higher than in a private duopoly.

Date: 1991-07
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Journal Article: Regulating innovative activity: The role of a public firm (1993)
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:117

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