A Game Theory Analysis on TD-SCDMA Standard: The Role of Government in Integrated Innovation of China

This paper analyzes the competition among the three technology standards in the Chinese 3G market with a three-player game model. Based on our basic assumptions, we build and solve our game models under different market conditions: one is with government subsidy to TD-SCDMA and the other is without such subsidy. Furthermore, we conduct a comparative analysis of the Nash equilibrium under these two market conditions. Our analysis shows that the commercialization and success of the TD-SCDMA technology standard in the Chinese 3G market depends on not only the R&D of the relevant firms but also the government subsidy, and that the stronger the government subsidy the more competitive this standard will be.