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Should The Public Sector Conduct Genomics R&D?

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  • Naseem, Anwar
  • Oehmke, James F.

Abstract

The nature of the observed market structure and R&D competition in genomics research is used as the basis for a comparative analysis of research under a mixed oligopoly, pure oligopoly and monopoly when the timing of the innovation outcome is uncertain (as in an R&D race), the winner-take-all assumption is relaxed and the profits in later stages are a function of the R&D expenditures of prior stages. The sufficient conditions under which a mixed oligopoly performs more R&D than the pure oligopoly and monopoly markets are derived and are shown to be a function of a) that public firm's objective is strictly greater than in the winning state then in the losing state, b) profits for the winning and losing private firms in the private duopoly are equal, post innovation, and c) the objective function of the firms in the mixed duopoly are increasing in research faster than they are for firms in the other two cases. It is suggested that when these conditions are met, the public firm can play a role in increasing the level of research in genomics.

Suggested Citation

  • Naseem, Anwar & Oehmke, James F., 2002. "Should The Public Sector Conduct Genomics R&D?," 2002 Annual meeting, July 28-31, Long Beach, CA 19842, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19842
    DOI: 10.22004/ag.econ.19842
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    References listed on IDEAS

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    1. Kamien,Morton I. & Schwartz,Nancy L., 1982. "Market Structure and Innovation," Cambridge Books, Cambridge University Press, number 9780521293853, December.
    2. Delbono, Flavio & Denicolo, Vincenzo, 1993. "Regulating innovative activity : The role of a public firm," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 35-48, March.
    3. Universities-National Bureau Committee for Economic Research & Committee on Economic Growth of the Social Science Research Council, 1962. "The Rate and Direction of Inventive Activity: Economic and Social Factors," NBER Books, National Bureau of Economic Research, Inc, number univ62-1.
    4. Flavio DELBONO & Vincenzo DENICOLÒ, 1991. "Races of Research and Development between Firms with Different Incentives to Innovate," Discussion Papers (REL - Recherches Economiques de Louvain) 1991021, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    5. Richard Nelson, 1962. "Introduction to "The Rate and Direction of Inventive Activity: Economic and Social Factors"," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 1-16, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Bontems, Philippe & Vercammen, James, 2006. "Public regulation of R&D racings," 2006 Annual meeting, July 23-26, Long Beach, CA 21367, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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