Mixed oligopoly, cost-reducing research and development, and privatisation

Maria José Gil-Moltó, Joanna Poyago-Theotoky*, José A. Rodrigues-Neto, Vasileios Zikos

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    23 Citations (Scopus)

    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 languageEnglish
    Pages (from-to)1094-1106
    Number of pages13
    JournalEuropean Journal of Operational Research
    Volume283
    Issue number3
    DOIs
    Publication statusPublished - 16 Jun 2020

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