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

Jiyou Shao and Lei Hua

Finance Research Letters, 2023, vol. 58, issue PB

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.

Keywords: Government subsidy; Firm R&D investment; Spillover effects; Stackelberg game (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pb:s1544612323007870

DOI: 10.1016/j.frl.2023.104415

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