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Digital empowerment and the internationalization of SRDI enterprises: a dynamic game approach

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ABSTRACT This paper develops a dynamic game with incomplete information to examine how digital technology and industrial policy drive nonlinear growth and internationalization for China’s specialized, refined, distinctive, and innovative (SRDI) firms. Three findings emerge: (1) Digital empowerment enables high-ability firms to escape linear trajectories through a convex learning function. (2) Optimal policy constitutes a three-stage subsidy menu: screening → reinforcement → commitment. This structure satisfies incentive compatibility and separates firm types to minimize resource misallocation. (3) Standard-setting power is governed by an endogenous tipping point. Once domestic market share crosses a critical mass, policy support amplifies market gains into durable rule-making advantage via network externalities. The framework complements heterogeneous-firm trade theory by endogenizing the interaction between digital learning speed and strategic technical standards.

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