Research on innovation decisions in industry-university-research cooperation based on differential games

The lack of innovation power in industry-university-research (IUR) cooperation is one of the important reasons leading to low independent innovation ability in China. Considering the long-term and dynamic nature of IUR innovation effort, the differential game method is used to compare and analyse the optimal decision under four scenarios: independent R&D by enterprises and university-research institutes, tax incentives for enterprises by the government, tax incentives and subsidies by the government, and a Stackelberg game considering the internal cost subsidy of enterprises. The results show that government tax incentives can improve the enthusiasm of enterprises for cooperative innovation, while government subsidies can simultaneously improve the enthusiasm of IUR institutes for cooperative innovation and can enhance the overall benefits of both parties and even the system. When certain conditions are met based on the government's tax incentive and subsidy policies, the innovation effort, cooperative innovation level and benefits in the Stackelberg game are optimal, and Pareto improvement can be achieved. The optimal benefits of enterprises and university-research institutes, the total benefits of the system, and the optimal trajectory of the cooperative innovation level tend to be stable over time in the four game scenarios.