Key generic technology research and development decision-making in Stackelberg competition

Research and development (R&D) of key generic technology (KGT) is conducive to improving the innovation capacity of countries and regions and has a significant impact on economic development and social progress. Compared to other technologies, the factors affecting the R&D decisions of KGT are more complex and need to be explored in depth. This study constructs a Stackelberg model considering R&D effort level, R&D efficiency and product differentiation to investigate the leader's and follower's decisions on R&D of KGT under three types of R&D modes. The results reveal that firms' strategic decisions are affected by product differentiation, R&D efficiency and different R&D modes. Product differentiation and R&D efficiency have impacts on equilibrium results and government subsidies for KGT R&D are optimal for social welfare.