Abstract:By constructing a technology selection model under the condition of government subsidies, this paper analyzes how government subsidies affect the technology choice of existing enterprises and new entrants in the market. It approves that government subsidies can (1) increase the demand for new technology products thus increasing the market share of new technology; (2) Change the demand for new technology products from 0 to 1 when consumers' preference for new technology products is not significantly different from mature technology products; (3) Benefit both enterprises and consumers through price transmission mechanisms; (4) Improve risk tolerance and profitability of enterprises when developing new technologies; (5) Increase or reduce the total utility of society in different situations.