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Research on government subsidy policy for firms’ R&D investment considering spillover effects: A Stackelberg game approach

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  • Shao, Jiyou
  • Hua, Lei

Abstract

This paper constructs a Stackelberg game model to explore the optimal government subsidy and firm R&D investment in noncooperative and cooperative R&D patterns, respectively. Results show that government subsidy is beneficial for improving firm R&D investment, which means government subsidy acts as a “Crowd-In Effect” rather than a “Crowd-Out Effect.” Meanwhile, the results demonstrate that the optimal subsidy provided according to firm-specific R&D patterns can accurately reach Pareto economic and social welfare improvement. In contrast, the effectiveness of an undifferentiated subsidy policy is minimal.

Suggested Citation

  • Shao, Jiyou & Hua, Lei, 2023. "Research on government subsidy policy for firms’ R&D investment considering spillover effects: A Stackelberg game approach," Finance Research Letters, Elsevier, vol. 58(PB).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007870
    DOI: 10.1016/j.frl.2023.104415
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    References listed on IDEAS

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    1. Sheng, Zhiyun & Ni, Ningning, 2024. "Dynamic game analysis of E-commerce platform rewards and research & development investment of settled enterprises," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1112-1125.

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