Abstract: In order to investigate the effectiveness of motivation from government subsidies to enterprise innovation, subsidy objects, subsidy intensity and subsidy environment are innovatively integrated into the same analytical framework, and the effect of the government's enterprise innovation subsidies on start-ups and incumbents are be compared. Firstly, on the premise of heterogeneity of innovation preference of enterprises, the evolutionary game model between newly-established firms and incumbent firms under government subsidy is constructed. Then, the threshold model and data of 143 listed enterprises in China are employed to empirically test the influence of subsidy intensity and competition on innovation choice behaviors of different firms. The results show that new enterprises are more accessible to be stimulated by innovation subsidy. Only when the subsidy intensity exceeds the threshold, government subsidy can encourage both types of enterprises to innovate. Fierce competition in product homogeneity weakens the promotion effect of government subsidies on enterprise innovation. Therefore, government should not only continue to increase the support for enterprise innovation, but also implement differentiated subsidy policies for different enterprises, and make reasonable allocation strategy of subsidy resources according to different market competition environment.

Key words: government subsidy; enterprise innovation; evolution game; hotelling model