Abstract:The intra-industry subsidies policy is introduced in view of the problem of "market failure" in R&D investment and the problem of government subsidies "allowance" in strategic emerging industries. The development of strategic emerging industries is divided into four stages, and the optimal R&D investment strategy of traditional enterprise and newly-coming enterprise under different subsidy policies is studied. The results indicate that the government subsidies has a "crowding-in effect” on R&D investment of traditional enterprise and newly-coming enterprise in the case of government subsidies. In the case of government subsidies and intra-industry subsidies, the R&D investment of newly-coming enterprise are positive correlation with the proportion of government subsidies, the proportion of intra-industry subsidies and the R&D investment of traditional enterprise in the strategic emerging industries, and the occurrence of intra-industry subsidies is conditional. In the case of intra-industry subsidies, intra-industry subsidies can only has a "crowding-in effect" on R&D investment of traditional enterprise and new enterprise in strategic emerging industries when the proportion of subsidies is less than a certain value. It is the dominant strategy for enterprises to increase R&D investment in order to realize innovation in the case of no government subsidies and no intra-industry subsidies.
