SHOULD THE PUBLIC SECTOR CONDUCT GENOMICS R&D?

The nature of the observed market structure and R&D competition in genomics research is used as the basis for a comparative analysis of research under a mixed oligopoly, pure oligopoly and monopoly when the timing of the innovation outcome is uncertain (as in an R&D race), the winner-take-all assumption is relaxed and the profits in later stages are a function of the R&D expenditures of prior stages. The sufficient conditions under which a mixed oligopoly performs more R&D than the pure oligopoly and monopoly markets are derived and are shown to be a function of a) that public firm’'s objective is strictly greater than in the winning state then in the losing state, b) profits for the winning and losing private firms in the private duopoly are equal, post innovation, and c) the objective function of the firms in the mixed duopoly are increasing in research faster than they are for firms in the other two cases. It is suggested that when these conditions are met, the public firm can play a role in increasing the level of research in genomics.