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Partial Privatization In A Mixed Duopoly With An R&D Rivalry

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  • John S. Heywood
  • Guangliang Ye

Abstract

This paper is the first to examine the incentive for partial privatization in a mixed duopoly with R&D rivalry. We show that because mixed duopolies engage in more R&D, the optimal extent of privatization is unambiguously reduced. Yet, this reduction is often very modest. Adopting the extent of privatization that would be optimal if one ignored the R&D rivalry routinely results in greater welfare than retaining a fully public firm and ignoring partial privatization. Only when R&D has an extremely low cost would it be preferable to ignore partial privatization.

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  • John S. Heywood & Guangliang Ye, 2009. "Partial Privatization In A Mixed Duopoly With An R&D Rivalry," Bulletin of Economic Research, Wiley Blackwell, vol. 61(2), pages 165-178, April.
    • Handle: RePEc:bla:buecrs:v:61:y:2009:i:2:p:165-178
    DOI: 10.1111/j.1467-8586.2008.00301.x
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    References listed on IDEAS

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    1. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, March.
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    6. Toshihiro Matsumura & Noriaki Matsushima, 2004. "Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach," Economica, London School of Economics and Political Science, vol. 71(284), pages 671-688, November.
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