A Game Model for Enterprises' Energy-Saving Product Innovation Strategies Based on Tax Incentives

This paper exploits exemption of VAT policy's functions and the effects on enterprise energy-saving product innovation. Based on customer preference, product competition, product innovation and enterprise's strategy on innovation management, a three-stage game theory model is built. In the first stage, the government determines a tax-free rate per unit product. In the second stage, enterprises of different innovation strategies choose their innovation level. In the third stage, manufacturers with differing innovation strategies price their goods. Then, by calculation, suggestions are forwarded for government and enterprises to determine the best innovation strategy.