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R&D Subsidies, Spillovers, and Privatization in Mixed Markets

Gil-Molto, MJ, Poyago-Theotoky, J and Zikos, V (2011) R&D Subsidies, Spillovers, and Privatization in Mixed Markets SOUTHERN ECONOMIC JOURNAL, 78 (1). pp. 233-255.


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We examine the use of subsidies to research and development (R&D) in a mixed and a private duopoly market. We show that the socially optimal R&D subsidy is increasing in the degree of spillovers, but it is lower in the private duopoly. The optimal R&D subsidy leads to an increase in total R&D and production; however, it does not lead to the equalization of per firm output and therefore to an efficient distribution of production costs. We also find that privatization of the public firm reduces R&D activity and welfare in the duopoly market. This result stands even when optimal R&D subsidies are provided.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Gil-Molto, MJ
Poyago-Theotoky, J
Zikos, V
Date : 2011
DOI : 10.4284/0038-4038-78.1.233
Uncontrolled Keywords : Social Sciences, Economics, Business & Economics, DEVELOPMENT COMPETITION, OLIGOPOLY, DUOPOLY, SUBSIDIZATION
Related URLs :
Depositing User : Symplectic Elements
Date Deposited : 09 Jul 2012 13:02
Last Modified : 31 Oct 2017 14:32

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