EconPapers    
Economics at your fingertips  
 

Innovation subsidy under duopoly

Pu-yan Nie, Xu Xiao, Chan Wang and Ting Cui

Managerial and Decision Economics, 2020, vol. 41, issue 3, 362-370

Abstract: Innovation plays extremely important roles in the society, and underinvestment in innovation popularly exists. This article aims to capture innovative subsidy with game theory model. First, unilateral subsidy stimulates both innovation and outputs of subsidized firms, while it deters those of opponents. Second, under innovation subsidy, relationship between subsidized firm's innovation and product substitutability satisfies a U shape. For opponents, it is also a U‐shaped relationship. Third, under unilateral subsidy, subsidizing high‐efficiency firms yields more innovation than subsidizing low‐efficiency firms. Finally, bilateral subsidy stimulates more innovation than unilateral subsidy. This study supports theory to subsidize innovation efficiently.

Date: 2020
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1002/mde.3105

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:41:y:2020:i:3:p:362-370

Access Statistics for this article

Managerial and Decision Economics is currently edited by Antony Dnes

More articles in Managerial and Decision Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2020-08-06
Handle: RePEc:wly:mgtdec:v:41:y:2020:i:3:p:362-370