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Endogenous Timing of R&D Decisions and Privatization Policy with Research Spillovers

Sang-Ho Lee () and Timur Muminov ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates an endogenous R&D timing game between duopoly firms which undertake cost-reducing R&D investments and then play Cournot output competition. We examine equilibrium outcomes in private and mixed markets and find that spillovers rate critically affects contrasting results. We show that a simultaneous-move appears in a private duopoly only if the spillovers rate is low while a sequential-move appears in a mixed duopoly irrespective of spillovers. We also show that public leadership is the only equilibrium if the spillovers rate is intermediate and its resulting welfare is the highest. Finally, we show that the implementation of privatization policy transforms a public leader to a private competitor, but this can decrease the social welfare.

Keywords: private duopoly; mixed duopoly; R&D spillovers; endogenous R&D timing game (search for similar items in EconPapers)
JEL-codes: L13 L32 L33 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-com and nep-ind
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