| Abstract | Chinese residents income gap has been increasing continuously since the reform and opening, which not only attracts much attention of all society, but also brings a great challenge to the development of China, especially to Chinese innovation driven road. From a special perspective of the relation between income gap and technical innovation, this paper overcomes the traditional limitations of the incompleteness of technical innovation forms, the uncontinuity of income gap, the homogeneity of income effect, and considering the difference of the income effect, this paper builds a product innovation competition model among firms under a continuous change of income gap, through which this paper deeply reveals the complex mechanism of the income gap change to product innovation, which comes from the coupling effect of “price effect” and “market scale effect”. Also this paper tests the theory through simulation and econometric analysis. The research show: there exists a complex nonlinear relationship between income gap (Gini coefficient) and firms’ product innovation. When “income effect” is small, the “market scale effect” is dominant, the relationship between income gap and product innovation is negative; when “income effect” is large, the “price effect” is dominant, the relationship between income gap and product innovation is positive; when “income effect” is medium, it is a “U” curve relationship between income gap and product innovation. The method and conclusion extend the current research about the relationship between income gap and technical innovation. |