R&D Output Sharing in a Mixed Duopoly and Incentive Subsidy Policy

Lee, Sang-Ho and Muminov, Timur (2017): R&D Output Sharing in a Mixed Duopoly and Incentive Subsidy Policy.

Abstract

This study investigates the incentives for R&D output sharing in a mixed duopoly and shows that public firm chooses full sharing of their R&D output, whereas private firm enjoys free-riding. We then devise an agreement-based incentive R&D subsidy scheme, which can internalize R&D spillovers and induce both firms to earn higher payoffs through full sharing of their R&D output. We also show that an R&D subsidy policy is welfare-superior to a production subsidy policy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Agreement-based R&D subsidy; Mixed duopoly; Production output subsidy; R&D output sharing
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency ; Optimal Taxation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private Enterprises

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