Co-opetition and Disruption With Public Ownership
52 Pages Posted: 19 Jan 2021 Last revised: 2 Nov 2021
Date Written: November 1, 2021
Do mandatory disclosure requirements make public firms less disruptive and competitive? Not necessarily. We offer a new perspective showing that mandatory disclosure can facilitate cooperation among competing firms --- a strategy known as "co-opetition." Cooperation raises firms' profitability, which makes financing disruptive investments easier. Investment in marginally and very attractive investment opportunities increases. However, there is also a cost, as cooperation on existing technologies could erode the commitment to developing new ones. Intermediately attractive investments are affected the most, leading to underinvestment in such opportunities. We provide evidence from the enactment of stricter disclosure requirements supporting the model's predictions.
Keywords: co-opetition, cooperation, competition, public firms, public ownership, disruption, innovation
JEL Classification: G31, G32, L41, O31
Suggested Citation: Suggested Citation