University-firm competition in basic research and university funding policy

Rune Stenbacka*, Mihkel Tombak

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)


We characterize equilibrium investments in basic research by the commercial and university sectors contingent on public funding of the university. We find that firms invest in basic research despite the opportunities for free riding and we present conditions under which firms even have incentives to augment the public funding to the university. We characterize the socially optimal volume of public funding for the university sector. Finally, we compare total investments in a mixed duopoly with those of duopolies composed of two universities as well as two profit‐maximizing firms.
Original languageEnglish
Peer-reviewed scientific journalJournal of Public Economic Theory
Issue number4
Pages (from-to)1017-1040
Number of pages24
Publication statusPublished - 09.03.2020
MoE publication typeA1 Journal article - refereed


  • 511 Economics

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics


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