Abstract
We develop a mixed oligopoly model to examine the role of R&D subsidies and evaluate the welfare effects of privatisation. In solving the oligopoly model we propose a novel use of aggregative games techniques. Our analysis reveals that privatisation reduces the optimal R&D subsidy. Furthermore, privatisation improves social welfare but only when the number of firms is sufficiently large. Implementing solely a subsidy to R&D does not lead to a ‘privatisation neutrality theorem’ or ‘irrelevance result’.
Original language | English |
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Pages (from-to) | 1094-1106 |
Number of pages | 13 |
Journal | European Journal of Operational Research |
Volume | 283 |
Issue number | 3 |
DOIs | |
Publication status | Published - 16 Jun 2020 |