State firms do not necessarily crowd out private firms. Rather, they can furnish services in areas that private firms consider unprofitable, and can coordinate infrastructural process on a wider area, allowing for gains in economies of scale. Eircom provides an example of this too as its reduction in investment in broadband post privatisation meant that the government had to begin reinvesting in broadband itself. [1] Private firms will still have incentives to develop new technologies because there will still be profits to be made. But absent private firms, innovation will still exist. State investment in innovation and new technology can be very effective, as was the case with the Space Race.  [1] Palcic, D., and Reeves, E., “Privatisation and productivity performance in Ireland”,  P.200