Collusion with Public and Private Ownership and Innovation

46 Pages Posted: 24 Oct 2017 Last revised: 29 May 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

Date Written: May 27, 2019

Abstract

We argue that, by enforcing the regular provision of vetted information, public ownership can help firms coordinate to avoid head-to-head competition. Such "collusion" opportunities increase profitability ex post but could lead to time-inconsistency problems undermining innovation ex ante. We show that public ownership benefits firms for which innovation is either of limited importance --- so coordination on existing technologies is key --- or of first-order importance --- so coordination with rivals developing similar technologies is key. Private ownership dominates for intermediately attractive or early-stage innovation, where time inconsistency problems are prevalent. The predictions of our model shed light on several puzzling stylized facts.

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 (May 27, 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

Register to save articles to
your library

Register

Paper statistics

Downloads
117
Abstract Views
692
rank
234,676
PlumX Metrics