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Public Policy towards R&D in a Mixed Duopoly with Spillovers

María José Gil-Moltó (), Joanna Poyago-Theotoky and Vasileios Zikos ()
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María José Gil-Moltó: Dept of Economics, Loughborough University

Authors registered in the RePEc Author Service: Maria Jose Gil Molto ()

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: We investigate the use of subsidies to R&D, both in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is positive and increasing in the degree of spillovers both in the private and the mixed duopoly, although it is lower for the former than for the latter. We also find support for the empirical claim that privatization is followed by a scaling down of the R&D activity. A comparative static analysis of welfare levels suggests that privatization is welfare detrimental, which lends some support to the views against the widespread adoption of privatization programs.

Keywords: mixed duopoly; process innovation; R&D subsidies; privatisation; spillovers. (search for similar items in EconPapers)
JEL-codes: L31 L32 O38 L13 L50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-mic
Date: 2006-07
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