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R&D Spillovers and Welfare Effect of Privatization with an R&D Subsidy

Lee, Sang-Ho and Muminov, Timur (2020): R&D Spillovers and Welfare Effect of Privatization with an R&D Subsidy.

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Abstract

We reexamine the results in Gil Molto et al. (2011) and compare the welfare effect of privatization policy in an R&D competition between a mixed duopoly and a private duopoly with an R&D subsidy. We show that an R&D subsidy with privatization policy is beneficial for society unless the spillovers rate is sufficiently low. Otherwise, public R&D leadership in a mixed market is socially superior.

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