Abstract: R&D activity of members in supply chain is an important way to achieve the maximum profits of the supply chain. Under the background of the government subsidies, viewing the strategy selection of R&D competition and cooperation between manufactures and suppliers, an evolutionary game model is established to analyze the dynamic evolution process and the steady state of suppliers, manufacturers and government. Theoretical analysis and numerical simulation results show that: Firstly, there is a unique evolutionary stable strategy between the upstream & downstream enterprises in supply chain and the government. Attracted by the more benefits from R&D cooperation in supply chain, R&D cooperation is the best strategy of manufacturers and suppliers. And “no subsidies” strategy is the best choice of the government, which is the expected evolution direction of the government.

Key words: R&D strategy; supply chain; threeparty evolutionary game; evolutionary stable strategy