Technology innovation decision-making and optimal government subsidy strategy with endogenous bargaining power in a vertical supply chain

Abstract

This study presents a vertical supply chain model that considers bargaining power to explore independent innovation and co-innovation decisions and their impacts and analyzes the optimal subsidy strategy for co-innovation. We find that collaboration promotes technology innovation. Increases in consumer innovation preferences and government subsidies are conducive to co-innovation. Both independent and co-innovation can promote Pareto improvements under limiting conditions. Government subsidies can improve co-innovation performance, but the subsidy parameter needs to be regulated. The optimal subsidy strategy is influenced by the subsidy target and budget. Governments prefer an innovative degree subsidy or a production cost subsidy.