Cross-ownership on R&D and social welfare in mixed oligopoly

We analyze the effects of cross-ownership between private firms (i.e. private cross-ownership) on R&D and social welfare in a mixed oligopoly in which a partially privatized public firm competes with two private firms. The main findings are that: (i) private cross-ownership induces the public firms’ R&D, despite it reduces the private firm’s R&D; (ii) private cross-ownership leads to a decrease (an increase) in industry profits if the degree of privatization is low (high); and (iii) private cross-ownership improves (decreases) consumer surplus and social welfare if the degree of privatization is low (high).