Optimal Decision of Agricultural Machinery Product Quality under the Regulation of Government Subsidy Policy

Abstract Some studies have shown that financial subsidy can promote the technology or product innovation of enterprises, and then improve the product quality. However, in the market competition of subsidized and non-subsidized agricultural machinery products, it is of great practical significance to study whether the enterprises subsidized by the government will improve the product quality. Considering that government provides subsidies for agricultural machinery products, a decision- making model for quality of agricultural machinery manufacturers is established. The relationship between government subsidy and quality of agricultural machinery products is analysed by numerical examples. Results show that the product quality and expected cost of agricultural machinery manufacturers are affected by the government’s financial support, but the relationship between financial subsidy and quality of agricultural machinery products is not monotonic. The increase of government subsidy standard has a negative effect on manufacturers improving the quality of agricultural machinery products in the diffusion region of subsidized agricultural machinery products, but the profits of manufacturers will continue to increase with the increase of subsidies. Government subsidies can promote agricultural machinery manufacturers to improve product quality in the non-subsidized agricultural machinery products diffusion region.