Innovation subsidy under duopoly
Chan Wang and
Managerial and Decision Economics, 2020, vol. 41, issue 3, 362-370
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.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
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 ().