'Collusion' with Public and Private Ownership and Innovation

49 Pages Posted: 24 Oct 2017 Last revised: 4 Nov 2019

See all articles by Arnoud W. A. Boot

Arnoud W. A. Boot

University of Amsterdam - Amsterdam Business School; Centre for Economic Policy Research (CEPR); Tinbergen Institute

Vladimir Vladimirov

University of Amsterdam Business School; Centre for Economic Policy Research (CEPR)

Date Written: November 3, 2019

Abstract

Head-to-head competition hurts profitability, and firms can benefit from avoiding it. Our model argues that strict transparency requirements help public firms soften competition and studies how that affects innovation aimed at displacing rivals. We show that intermediately attractive innovation thrives best in private firms, as opportunities to soften competition on existing technologies undermine public firms' commitment to innovation. However, being public dominates if innovating is either unattractive or highly attractive. In the latter case, public firms try to displace rivals by innovating but avoid competition when lacking a technological edge. Our predictions explain conflicting evidence regarding innovation in public firms.

Keywords: Public and Private Ownership, Innovation, Collusion

JEL Classification: G31, G32, L41, O31

Suggested Citation

Boot, Arnoud W. A. and Vladimirov, Vladimir, 'Collusion' with Public and Private Ownership and Innovation (November 3, 2019). Available at SSRN: https://ssrn.com/abstract=3057555 or http://dx.doi.org/10.2139/ssrn.3057555

Arnoud W. A. Boot

University of Amsterdam - Amsterdam Business School ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 4162 (Phone)
+31 20 525 5318 (Fax)

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Vladimir Vladimirov (Contact Author)

University of Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB
Netherlands

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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