Abstract
Relationship between innovation subsidies and corporate strategic choices has been extensively studied. Public innovation subsidies are by no means a certain value, existing in the form of an effective range instead. This means that the public innovation subsidies existing within the reasonable range can achieve the same incentive effect. So, what is the reasonable range or the effective boundaries of public innovation subsidies to promote enterprises that adopt cooperation strategies? There is no definite answer. Based on classical game theory, a stochastic evolutionary game model is proposed in this paper, which takes into account the influence of random disturbance on the strategy evolution process. An effective boundary of public innovation subsidy is provided as the main contribution based on a mature game scenario. A set of experimental data is subsequently selected as the sample for numerical simulation and result verification. The results showed that the probability of noncooperation within the effective value range will successfully converge to zero, which also means that the agents will adopt a collaborative cooperation strategy. The regulation effect of the combination of multiple variables is also discussed.
Highlights
Innovation investment is of great significance to promoting private innovation, but market failures will reduce private innovation investment
If it is difficult to recover the innovation investment made by private enterprises to realize public value, it will become the main reason for the insufficient motivation of private enterprises for public welfare innovation
Public innovation subsidies have become an effective policy tool to compensate for market failures [1,2], but they have brought some new problems to public innovation investment
Summary
Innovation investment is of great significance to promoting private innovation, but market failures (such as spillover effects and multiple uncertainties) will reduce private innovation investment. Public innovation subsidies have become an effective policy tool to compensate for market failures [1,2], but they have brought some new problems to public innovation investment. There has been controversy over the effectiveness of public innovation subsidies for the past 20 years. Is public subsidy an effective supplement to the private expenditure or to replace and crowd out private investment? The innovation subsidies offered by the government are mainly used to overcome two typical market failures: Spillovers of innovation and financing gaps due to asymmetric information [5]
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