Game analysis of the impact of developing countries' R&D subsidy in the competition of international trade

This paper analyzes the relation of the developing countries' RD subsidy and their enterprises' RD capacity to market space.By introducing the usage parameters of RD subsidy decided by the enterprises' RD capacity,an endogenous expansion of enterprises' RD performance is made to demonstrate the fact that during the innovation for cost economization,there are differences between enterprises in the amount as RD performance is transformed from governmental RD subsidy.Based on the non-cooperative game,the interaction between the enterprises under certain RD capacity in two countries is analyzed as well as the amount of RD performance transformed from RD subsidy using optimal RD policy in developing countries.The developed new model can deal with the relations between cost-economizing enterprises' RD activity and capacity,their usage of RD subsidy and market space.The study concludes that when the developing countries make the decision policy of RD subsidy,they should take into account the level of enterprises' RD overflow and capacity and their market space.