This thesis take the two-stage duopoly model to probe into the optimal R&D and output strategies of the Duopoly manufacturers. In this text the important factors that affect the strategies are product substitution parameter, R&D yield overflow parameter, R&D efficiency parameter, unit cost and market parameter. The cooperation R&D strategy of the duopoly manufacturers will make the R&D level closer to the social optimal R&D level, when it comes to that the R&D yield overflow parameter is 50%

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... ater than the product substitution parameter. And given that some parameters requirements are satisfied, when the R&D yield overflow parameters changes, the adjustment of the equilibrium of R&D cost and output is decided by whether the duopoly manufacturers adopt the cooperative or the uncooperative strategy in the R&D game.