To encourage enterprises to conduct technology innovation, the government needs to formulate appropriate subsidies policy. This\npaper compares two R&D subsidy policies in a supplier-manufacturer supply chain, in which the manufacturer conducts R&D\nactivity for quality improvement. By means of game theory, we investigate the optimal decisions of the players under the two R&D\nsubsidy policies, that is, input subsidy policy and product subsidy policy. Finally, we compare the profits and welfare to explore the\nbetter R&D subsidy policy and provide decision support for government to formulate subsidy policy. The results show that under\ninput subsidy policy the optimal production output, quality improvement, profits, government subsidies, and social welfare are all\nlower than those of product subsidy policy. Therefore, the government should use product subsidy strategy to encourage enterprise\nR&D activities.
Loading....