International Journal of Humanities and Social Science

ISSN 2220-8488 (Print), 2221-0989 (Online) 10.30845/ijhss

Is Partial Privatization the Optimal Choice for a Stackelberg Leader firm when there is R&D rivalry?
Najiba Benabess

Abstract
This paper investigates whether a public leader firm should be partially privatized in mixed duopoly market when there is R&D rivalry. Heywood and Ye (2009) showed that the extent of partial privatization for a Cournot player firm increases in the cost of R&D parameter. That is only when R&D is very cheap should a fully public firm be retained rather than selling some of their share to the private sector. For the Stackelberg model, the relationship between the extent of privatization and the cost of the R&D is more complicated than that of the Cournot model. For higher cost of R&D the extent of privatization actually decreases.

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