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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). 233 - 255. ISSN 0038-4038

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Abstract

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
Uncontrolled Keywords: Social Sciences, Economics, Business & Economics, DEVELOPMENT COMPETITION, OLIGOPOLY, DUOPOLY, SUBSIDIZATION
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Divisions: Faculty of Business, Economics and Law > Economics
Depositing User: Symplectic Elements
Date Deposited: 09 Jul 2012 13:02
Last Modified: 23 Sep 2013 19:22
URI: http://epubs.surrey.ac.uk/id/eprint/430840

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