Game Analysis Of Patent-protection And Subisidy's Influence On Enterprise's R&D

R&D spillover or externalities occur when R&D investment of one firm benefits other firms. One of the most important problems with R&D spillover is the corresponding externalities: if spillover is large enough, one firm will take free ride on other firms'R&D investment. But if free ride is rational for every firm, total R&D investment is low in efficiency. And also firm's R&D enthusiasm will be depressed. However, production form R&D makes firm acquire monopoly, and obtain excess profit. On this R&D issue, government has to abandon the part of night watchman, and certain mechanism must be made to balance externalities and monopoly profit. This paper takes patent-protection and R&D subsidy for example to discuss government's balance mechanism.Based on the basic premise that R&D externalities are exogenous, this paper discusses the two mechanism via oligopoly game model. In the first stage of patent-protect model, government decides best patent-protection term to maximize social welfare; then the second stage, considering an oligopoly industry, two firms carry out R&D investment under set patent-protection term to maximize long-term profit; in the third stage, firm chooses output to maximize a year's profit. Besides, according to the different way of cooperation on R&D and production, the model falls into three: completely cooperation, incomplete cooperation and completely noncorporation, backward method is used to get best answer for this game model. The conclusion is drawn from comparing the best answer: the profit and R&D input resulting from the cooperation on both R&D and production are both larger then the one from the other two ways of cooperation, but the social welfare is not as large as the one from the incomplete cooperation.In term of occurrence time, government subsidy is divided into committed regime and non-committed regime. In the committed regime model, the government's decision for subsidy occurs in the first stage, and the enterprises make a decision for R&D input; in the non-committed regime model, the government's decision for subsidy occurs after the enterprises'decision. Conclusion is drawn from the best R&D input: if government wants to carry out non-committed regime policy, he must commit a subsidy rate lager then the one of committed regime model.