Research On The Incentive Mechanism Of Government Subsidy To Enterprise's Technological Innovation

One of the characteristics of technological innovation is externality, which accelerates innovation diffusion, creates huge aggregation economy and promotes the development of economy. At the same time, the externality brings to economy some negative effects. Because not all of the outputs of innovation belong to enterprises that do innovation, the amount of innovation when marginal private profit equals marginal cost must be less than that when marginal social profit equals marginal cost. We must adopt some effective measures to make up such external loss to impel marginal private profit approaching marginal social profit. Government subsidy is one of the measures of avoiding externality and incenting innovation. Because of the asymmetry information between government and enterprise, government subsidy isn't always effective. So this paper tries to discuss incentive mechanism of government subsidy to enterprise's technological innovation under the circumstance of asymmetry information by principal-agent theoryBased on the theories of technological innovation incentive mechanism and externality of technological innovation, the paper sets up a model of government subsidy incentive mechanism, and analyses its agent cost under different information circumstance by principal-agent theory According to the model of incentive and supervision of government, the paper draws government's "set of willing supervision". Using multi-task model of principal-agent theory, the paper discusses allocation of subsidy among different stages of innovation. Based on the results above, the paper puts forward some suggestions to improve incentive effects of government subsidy...