The Analysis of Government R&D Subsidy Policies: A Multi-stage Game
This paper analyzes the government R&D subsidy strategies at different
stages, considering cost efficiency differences and subsidy rate as
endogenous variables, and extends the subsidy from symmetric to
asymmetric cases. We find that although subsidies in the R&D stage
bring greater innovation output, they may lead to a deadweight loss of
social welfare, while choosing the optimal subsidy rate in the output
stage can maximize social welfare. It’s usually difficult for
governments to pursue both maximum social welfare and innovation output.
The cost efficiency of R&D and the symmetry of subsidies will also
influence the strategies of government subsidy policies.