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Public Grants Awarded to Private Firms: A Mixed Duopoly Analysis

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  • Firoozi, Fathali
  • Lien, Donald

Abstract

The literature presents conflicting arguments on the social value of public grants awarded to private firms. Some of the prominent examples are those associated with public grants for medical research awarded by the National Institute of Health to private healthcare providers. This study evaluates the social welfare impact of such public grants to private sector in a mixed duopoly model. The results generate equilibrium-based conditions that could be responsible for the enhancing or deteriorating social welfare effect of public grants awarded to private healthcare providers. The status of the competing public healthcare providers turns out to be a crucial factor. The results have policy implications for public granting agencies and for state governments in charge of public healthcare providers.

Suggested Citation

  • Firoozi, Fathali & Lien, Donald, 2021. "Public Grants Awarded to Private Firms: A Mixed Duopoly Analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 90-96.
    • Handle: RePEc:eee:quaeco:v:79:y:2021:i:c:p:90-96
    DOI: 10.1016/j.qref.2020.05.017
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    References listed on IDEAS

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    More about this item

    Keywords

    Healthcare policy; National Institute of Health; Stackleberg interactions; Stochastic demand; welfare analysis;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D60 - Microeconomics - - Welfare Economics - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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