Innovation spillover, licensing, and ex-post privatization in international duopoly

Liu, Yi and Tan, Yu and Fang, Yu (2019): Innovation spillover, licensing, and ex-post privatization in international duopoly.

Abstract

This paper studies the impact of innovation spillover and licensing on optimal ex-post privatization policies by involving an exogenous R&D activity in a partial-equilibrium international duopoly setting. By assuming a domestic public firm is relatively inefficient compared to its foreign private rival, we characterize and discuss optimal privatization policies under both foreign private and domestic public innovation. The theoretical results suggest that foreign private (domestic public) innovation, including both spillover and licensing, reduces (increases) the optimal degree of ex-post privatization. In addition, innovation spillover and licensing have the same impact direction on privatization policies. The numerical evidence supports these theoretical findings.

• Item Type: MPRA Paper
• Language: English
• Keywords: Spillover, Licensing, Ex-post Privatization, International Duopoly
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; H - Public Economics > H4 - Publicly Provided Goods; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out ; Joint Ventures ; Technology Licensing; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions ; Privatization ; Contracting Out

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