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Partial Privatization and Subsidization in a Mixed Duopoly: R&D versus Output Subsidies

Author

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  • Lee, Sang-Ho
  • Muminov, Timur
  • Tomaru, Yoshihiro

Abstract

This study investigates R&D and output subsidies in a mixed duopoly with partial privatization. We show that an output subsidy is welfare-superior to an R&D subsidy policy, but the government has a higher incentive to privatize the public firm under the output subsidy than the R&D subsidy. However, when the government uses the policy mix of R&D and output subsidies together, it can achieve the first-best allocation, in which the degree of privatization does not influence output subsidies but influences R&D subsidies.

Suggested Citation

  • Lee, Sang-Ho & Muminov, Timur & Tomaru, Yoshihiro, 2017. "Partial Privatization and Subsidization in a Mixed Duopoly: R&D versus Output Subsidies," MPRA Paper 79778, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79778
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    References listed on IDEAS

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    More about this item

    Keywords

    Mixed duopoly; Partial privatization; R&D subsidy; Output subsidy;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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