Disclosure of R&D knowledge in a mixed duopoly

In this paper, we analyze whether firms want to disclose their R&D knowledge for free in a mixed duopoly. We extend the paper by Poyago-Theotoky (1999) on strategic R&D with endogenous spillovers by considering a mixed duopoly. We find that when spillovers of information are treated as endogenous the public firm fully discloses its information so long as R&D levels are chosen non-cooperatively. The private firm does not disclose its information. This result holds if the private firm is foreign owned. We have extended the main model to consider the threat of entry faced by an incumbent public firm and whether it is privatized or not. We find that the public firm is not privatized and there is entry if the fixed entry cost is low enough.