Government Subsidies Transmission Mechanism to High-tech Research and Development Firms

This paper considers the Government subsidies policy transmission mechanism to two Cournot competing firms, both of which have same products and plan high- tech research and development. The problem is studied using a game model with different stages in a technology cycle. The high-tech research and development firm will obtain government subsidies, and according to the time value of money on the two firms, we make a discount calculation about the two enterprise's profit. We analyze government subsidies policy transmission mechanism to high-tech research and development firm by comparing the results of market equilibrium. Our results highlight only the two firms investing equally in research and development is a stable equilibrium.