The Optimal Boundary of R&D Subsidies for Promoting R&D Cooperation Involving External Investors

Abstract

Abstract: In the process of implementing the innovation-driven strategy, it is crucial to improve the effectiveness of R&D subsidies of local governments. Based on the dual "certification effect" of R&D subsidies on firms, this paper proposes a model of stochastic evolutionary game among three participants:local governments, R&D firms and investors. By solving the model, we derive the effective boundary conditions of R&D subsidies during the stable evolution of the participants' strategies. Drawing upon the data of 601 ChiNext listed companies in 12 regions in 2019 with Beijing as the benchmark area for R&D subsidy policies, this paper compares the effectiveness of R&D subsidies in other regions. The results show that:the R&D subsidies issued by the local governments do not play a decisive role in the choice of R&D and investment strategies by enterprises and investors, but will significantly affect the convergence speed and stability of their strategy selection probabilities. Benchmarked against Beijing, other regions show an effective boundary for R&D subsidies, and the effectiveness varies directionally from region to region. To be specific, R&D subsidies are insufficient in regions like Anhui and Sichuan, at the same level as Beijing in regions like Guangdong, and redundant in regions like Hubei, Shandong and Henan.

Key words: certification effect, R&D subsidies, stochastic evolutionary game

Li Junqiang, Ren Hao, Wang Mingyue. The Optimal Boundary of R&D Subsidies for Promoting R&D Cooperation Involving External Investors[J]. Management Review, 2023, 35(11): 102-112,125.

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