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<p>Computing power has been viewed as a key productivity in the digital era, but limited computing speed and high energy consumption constrain its development. A critical measure for addressing these issues is the provision of government research and development (R&amp;D) subsidies to foster enterprise innovation, thereby advancing the development of green and high-quality computing power. This paper considers two competing suppliers of computing power with different market shares and investigates the optimal target for government-provided R&amp;D subsidies to maximize social welfare. Our analysis indicates that, regardless of the government’s subsidy strategy, the price of computing power, R&amp;D investment, and profits for both enterprises always increase with the subsidy amount. However, social welfare increases with the subsidy amount up to a certain threshold, beyond which further increases become detrimental to social welfare. We also show that, when the government contemplates subsidizing a single enterprise, it is always more beneficial for social welfare to subsidize the enterprise with the larger market share. Ultimately, we highlight the importance of enterprises’ R&amp;D coefficient when considering the optimal subsidy target. Specifically, if the R&amp;D coefficient is high, subsidizing two enterprises simultaneously is often the best choice, provided the subsidy amount does not exceed a threshold detrimental to social welfare.</p>

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Selection of the competitive Hi-tech computing power firms under subsidy: a case in the Guangdong-Hong Kong-Macao Greater Bay Area, China

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年5月15日

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  • Haowen Xu,
  • Dong Wang,
  • Yujing Chen

摘要

Computing power has been viewed as a key productivity in the digital era, but limited computing speed and high energy consumption constrain its development. A critical measure for addressing these issues is the provision of government research and development (R&D) subsidies to foster enterprise innovation, thereby advancing the development of green and high-quality computing power. This paper considers two competing suppliers of computing power with different market shares and investigates the optimal target for government-provided R&D subsidies to maximize social welfare. Our analysis indicates that, regardless of the government’s subsidy strategy, the price of computing power, R&D investment, and profits for both enterprises always increase with the subsidy amount. However, social welfare increases with the subsidy amount up to a certain threshold, beyond which further increases become detrimental to social welfare. We also show that, when the government contemplates subsidizing a single enterprise, it is always more beneficial for social welfare to subsidize the enterprise with the larger market share. Ultimately, we highlight the importance of enterprises’ R&D coefficient when considering the optimal subsidy target. Specifically, if the R&D coefficient is high, subsidizing two enterprises simultaneously is often the best choice, provided the subsidy amount does not exceed a threshold detrimental to social welfare.