Abstract: Based on the perspective of product quality improvement innovation, the paper puts the technological spillover level, product level difference and vertical quality difference together into the analysis framework, and constructs a three-stage dynamic game model to discuss the R&D investment decision and government optimization under different R&D model. The results show: government R&D subsidy can improve the enthusiasm of R&D investment and social welfare, and will not produce "crowding - out effect";The level of technological spillover and the degree of product differentiation both have different effects on the optimal subsidy intensity under different R&D models; Whether in R&D competition model or R&D cooperation model, enterprise R&D investment, product quality and social welfare level are always the same under the optimal subsidy intensity, and enterprises prefer to choose the R&D model of profit maximization. Therefore, the enterprise itself should strengthen R&D investment to improve product quality competitiveness, and the government should formulate a reasonable range of subsidy intensity for different R&D innovation modes and industry cycle characteristics to improve the efficiency of innovation incentive by strengthening the construction of enterprise subsidy qualification examination system, but also should strengthen the enterprise subsidy qualification examination system construction to improve innovation incentive efficiency.