Spillover Effect and Sustainable Innovation of Competing Firms with Channel Leadership

In each stage of the supply chain system, the sustainable green innovation plays a critical role. Moreover, there may exist substitution effect between products, and the spillover effect of learning characteristics generated by sustainable green technology investment will enable other related companies to obtain certain profits. Therefore, the spillover effect and substitution effect of sustainable green technology investment will change the pricing decision, demand decision and the profits of the two competing companies. Based on the spillover effect characteristics of sustainable green technology innovation on the two competing companies, we build mathematical models and analyze the models with numerical results. The research results are as follows: In a duopoly market, the Nash equilibrium profits of the two competing companies will decrease as the product's substitutability increases, and the Nash equilibrium profit of one company will change due to the change of the scale of the other's sustainable green technology innovation investment. Within a certain range, when the market has demand for green products, both competing companies have incentives to take corresponding investments and obtain profits, but there are also have risks. At the same time, a good sustainable green technology innovation investment market environment will increase corporate profits, but when it exceeds a certain threshold value, it will also reduce corporate profits. Moreover, companies in the status of followers have inherent disadvantages, so when the market environment and their own conditions are sufficient, they should make decisions in a timely manner.