Quality competition, technology spillovers and optimal subsidy strategy

Science Research Management ›› 2015, Vol. 36 ›› Issue (5) : 38-46.

Wu Fuxiang, Duan Wei

Author information +

History +

Abstract

Based on the perspective of product quality competition, we build a model with quasi-linear utility function which contains vertical differentiation and horizontal differentiation. With the function and the using of game theory, information economics, simulation deduction and numerical simulation, we conduct welfare analysis on the efficiency of government subsidy in the transition of national technology innovation strategy from the dimensions of sales variance and R&D externality. The conclusions of paper show that: First, in order to achieve the same level of social welfare effect, the cost of subsidies on products is higher than the cost of R&D subsidy. Moreover, the extra cost of subsides will transfer to firm's profits. Second, the U-shaped relationship between the subsidy efficiency and horizontal differentiation is verified and the welfare increase of subsidies on industries with high technology spillover is significantly higher than that on the industries with low technology spillover subsidies. Therefore, the government should implement different support and subsidy policies based on the different stages of the industry.

Key words

quality completion / technology spillovers / product differentiation / R&D subsidy

Cite this article

EndNote

Ris (Procite)

Bibtex

Download Citations

Wu Fuxiang, Duan Wei. Quality competition, technology spillovers and optimal subsidy strategy[J]. Science Research Management. 2015, 36(5): 38-46

References

[1] David P A, Hall B H, Toole A. Is public R&D a complement or substitute for private R&D: A review of the econometric evidence [J]. Research Policy, 2000, 29(4): 497-529. [2] González X, Pazó C. Do public subsidies stimulate private R&D spending [J]. Research Policy, 2008, 37(3): 371-389. [3] 刘虹,肖美凤,唐清泉.R&D补贴对企业R&D支出的激励与挤出效应:基于中国上市公司数据的实证分析[J].经济管理,2012(4):19-28. Liu Hong, Xiao Meifeng, Tang Qingquan. Incentive and crowding-out effects of R&D subsidy on companies 'R&D expenditures——empirical analysis based on the data of chinese listed companies [J]. Economic Management Journal in China, 2012(4): 19-28. [4] 戴小勇,成力为.财政补贴政策对企业研发投入的门槛效应[J].科研管理,2014,35(6):68-76. Dai Xiaoyong, Cheng Liwei. The threshold effects of fiscal subsidy policy on corporate R&D investment [J]. Science Research Management, 2014, 35(6): 68-76. [5] Davidson C, Segerstrom P. R&D subsidies and economic growth [J]. The RAND Journal of Economics, 1998, 29(3): 548-577. [6] 王宇,刘志彪.补贴方式与均衡发展:战略性新兴产业成长与传统产业调整[J].中国工业经济,2013(8):57-69. Wang Yu, Liu Zhibiao. Subsidies and balanced development: growth of strategic emerging industries and adjustment of traditional industries [J]. China Industrial Economics,2013,(8):57-69. [7] 唐清泉,卢珊珊,李懿东.企业成为创新主体与R&D补贴的政府角色定位[J].中国软科学,2008(6):88-98. Tang Qingquan, Lu Shanshan, Li Yidong. Enterprises as innovative entities and government roles in R&D subsidies [J]. China Soft Science, 2008 (6): 88-98. [8] 周绍东.企业技术创新与政府R&D补贴:一个博弈[J].产业经济评论,2008(3):38-51. Zhou Shaodong. Enterprise technology innovation and government R&D subsidy: A game [J]. Review of Industrial Economics, 2008, 7(3): 38-51. [9] 安同良,周绍东,皮建才.R&D补贴对中国企业自主创新的激励效应[J].经济研究,2009(10):87-98. An Tongliang, Zhou Shaodong, Pi Jiancai. The stimulating effects of R&D subsidies on independent innovation of Chinese enterprises [J]. Economic Research Journal, 2009(10): 87-98. [10] Gil-Moltó M J, Poyago-Theotoky J, Zikos V. R&D subsidies, spillovers, and privatization in mixed markets [J]. Southern Economic Journal, 2011, 78(1): 233-255. [11] 赵丹,王宗军.消费者剩余,技术许可选择与双边政府R&D补贴[J].科研管理,2012(2):88-96. Zhao Dan, Wang Zongjun. Consumer surplus, choice of technology licensing, and bilateral government R&D subsidy [J]. Science Research Management, 2012, 33(2): 88-96. [12] D'Aspremont C, Jacquemin A. Cooperative and noncooperative R&D in duopoly with spillovers [J]. The American Economic Review, 1988, 78(5): 1133-1137. [13] Dixit A K, Stiglitz J E. Monopolistic competition and optimum product diversity [J]. The American Economic Review,1977, 67(3): 297-308. [14] Singh N, Vives X. Price and quantity competition in a differentiated duopoly [J]. The RAND Journal of Economics, 1984, 15(4): 546-554. [15] Grossman G M, Helpman E. Quality ladders in the theory of growth [J]. The Review of Economic Studies, 1991, 58(1): 43-61. [16] Sutton J. Technology and market structure [J]. European Economic Review, 1996, 40(3): 511-530. [17] Sutton J. One smart agent [J]. The Rand Journal of Economics, 1997, 28(4): 605-628. [18] Symeonidis G. Cartel stability in advertising-intensive and R&D intensive industries [J]. Economics Letters, 1999, 62(1): 121-129. [19] Symeonidis G. Comparing cournot and bertrand equilibria in a differentiated duopoly with product R&D [J]. International Journal of Industrial Organization, 2003, 21(1): 39-55. [20] 吴福象,朱蕾.技术进步,结构转换与区域经济增长:基于全国、广东和江苏投入产出表数据的实证研究[J].上海经济研究,2014(1):18-28. Wu Fuxiang, Zhu Lei. Technical progress, structure transformation and regional economic growth——A comparative study based on the input-output tables of China, Guangdong and Jiangsu province [J]. Shanghai Journal of Economics, 2014(1): 18-28. [21] 吴福象,沈浩平.新型城镇化、创新要素空间集聚与城市群产业发展[J].中南财经政法大学学报,2013(4):36-42. Wu Fuxiang, Shen Haoping. New urbanization, innovative elements spatial concentration and industrial development of urban agglomerations [J]. Journal of Zhongnan University of Economics and Law, 2013, 4: 36-42.