Diverse government subsidy modes in a supply chain considering different innovation dimensions

Governments have formulated policies to support companies developing new energy vehicle, and unexpected slow development brings further attention to the policy. Concerns have been raised about how to design a subsidy mode for policies. In this paper, we provide insights into the preference of subsidy mode, government’s subsidy strategies and firms’ strategies of researching and pricing among product subsidy, innovation subsidy, and product-innovation subsidy. We find that the government and companies prefer the product-innovation subsidy and detest innovation subsidy. Moreover, there is a trade-off in the government’s subsidy strategy under the product-innovation subsidy, where the product subsidy payment is higher than that under the product subsidy, and the innovation subsidy payment is lower than that under the innovation subsidy. In terms of price strategies, the manufacturer’s price is lowest under the product subsidy, and the supplier’s price is lowest under the innovation subsidy. Furthermore, the investment strategies under the three subsidy cases are positively correlated with consumer recognition and firms’ R &D capabilities, while the government subsidy strategy under the innovation subsidy show some differences. Government should make the product-innovation subsidy as the first choice, and turning to the innovation subsidy as companies’ R &D capabilities and consumer recognition increasing.