Abstract:With more and more enterprises actively strengthening customer involvement in innovation activities, from the perspective of enterprise competition,this article applies the relevant knowledge of game theory, considers the cost of customer participating in innovation and performance, and uses the extended Hotelling model to analyze the function models in the background of implementing customer involvement in innovation or not and innovation input differences, and its important effects on the equilibrium price、profit and competition strategies,and then forms some useful conclusions about enterprise implementing customer involvement in innovation strategy.These conclusions are advantageous to the enterprise making reasonable strategies for competitive advantage through encouraging customer participation.