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Equilibrium and Optimal R&D Roles in a Mixed Market

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Abstract

This is the first paper to investigate the timing of the R&D decisions in a mixed market. Considering a model in which a public firm competes against a private one, we examine the desirable (welfare-maximizing) and the equilibrium R&D role of the public firm. Our results suggest that from a social point of view, the public firm should carry out its investment as a Stackelberg follower. Using the observable delay game of Hamilton and Slutsky [Games and Economic Behavior 2 (1990) 29], we show that the public firm may play this desirable role.

Suggested Citation

  • Vasileios Zikos, 2007. "Equilibrium and Optimal R&D Roles in a Mixed Market," Discussion Paper Series 2007_08, Department of Economics, Loughborough University, revised Mar 2007.
    • Handle: RePEc:lbo:lbowps:2007_08
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    File URL: http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/R&D_Roles.pdf
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    References listed on IDEAS

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    1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-1137, December.
    2. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    3. Yannis Katsoulacos & David Ulph, 1998. "Innovation Spillovers and Technology Policy," Annals of Economics and Statistics, GENES, issue 49-50, pages 589-607.
    4. Toshihiro Matsumura, 2003. "Stackelberg Mixed Duopoly with a Foreign Competitor," Bulletin of Economic Research, Wiley Blackwell, vol. 55(3), pages 275-287, July.
    5. Lu, Yuanzhu, 2007. "Endogenous timing in a mixed oligopoly: Another forgotten equilibrium," Economics Letters, Elsevier, vol. 94(2), pages 226-227, February.
    6. Kenneth Fjell & John S. Heywood, 2002. "Public Stackelberg Leadership in a Mixed Oligopoly with Foreign Firms," Australian Economic Papers, Wiley Blackwell, vol. 41(3), pages 267-281, September.
    7. Akira Nishimori & Hikaru Ogawa, 2005. "Long‐Term And Short‐Term Contract In A Mixed Market," Australian Economic Papers, Wiley Blackwell, vol. 44(3), pages 275-289, September.
    8. repec:bla:ausecp:v:41:y:2002:i:2:p:185-90 is not listed on IDEAS
    9. Poyago-Theotoky, Joanna, 1998. "R&D Competition in a Mixed Duopoly under Uncertainty and Easy Imitation," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 415-428, September.
    10. María José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2006. "Public Policy towards R&D in a Mixed Duopoly with Spillovers," Discussion Paper Series 2006_17, Department of Economics, Loughborough University.
    11. repec:adr:anecst:y:1998:i:49-50:p:23 is not listed on IDEAS
    12. Nett, Lorenz, 1994. "Why private firms are more innovative than public firms," European Journal of Political Economy, Elsevier, vol. 10(4), pages 639-653, December.
    13. 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.
    14. Symeonidis, George, 2003. "Comparing Cournot and Bertrand equilibria in a differentiated duopoly with product R&D," International Journal of Industrial Organization, Elsevier, vol. 21(1), pages 39-55, January.
    15. Jacques, Armel, 2004. "Endogenous timing in a mixed oligopoly: a forgotten equilibrium," Economics Letters, Elsevier, vol. 83(2), pages 147-148, May.
    16. repec:bla:ausecp:v:41:y:2002:i:3:p:267-81 is not listed on IDEAS
    17. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
    18. Akira Nishimori & Hikaru Ogawa, 2002. "Public Monopoly, Mixed Oligopoly and Productive Efficiency," Australian Economic Papers, Wiley Blackwell, vol. 41(2), pages 185-190, June.
    19. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
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    Cited by:

    1. Jingjing Wang & Chi Leung & Yue Kwok, 2015. "Stochastic control model for R&D race in a mixed duopoly with spillovers and knowledge stocks," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 38(2), pages 177-195, October.

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    More about this item

    Keywords

    Endogenous timing; R&D; Stackelberg; mixed market.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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