Abstract: Energy is an important foundation of national economic and social development. How to realize green and sustainable development of energy is a hot topic in the world. China’s demand for high-purity silicon wafers mainly relies on imports, and the photovoltaic systems manufactured are mostly exported due to the impact of domestic environment. However, the high import price and low export price make China become a processor with low added value of photovoltaic system. At the same time, due to the impact of the “531” new policy on China’s photovoltaic industry, the competition among domestic photovoltaic manufacturers is more fierce. It has seriously restricted the healthy development of photovoltaic industry in China. Therefore, on the basis of relevant research, the government competition policy and technological innovation variables are introduced into the model. Different from the previous research, the government competition award is introduced as the interpretation of the government competition policy, and the level of technological innovation effort is introduced as the manufacturer’s efforts to achieve technological innovation. In addition, the Government Competition Award and technological innovation are introduced. The new level of effort is linked to the optimal profit of manufacturers at all levels under different government competition awards and different levels of technological innovation efforts. The two-level model of silicon manufacturer and photovoltaic system manufacturer in polysilicon supply chain is considered a game model about wholesale price of silicon wafer and sales volume of photovoltaic system is established, the optimal profit function of manufacturers at all levels is obtained, and through the 2019 China Photovoltaic Industry Development Research Report， photovoltaic and solar energy industry analysis report and other internal reports related data and forecast data empirical study the impact of competition policy and technological innovation factors on the optimal and overall supply chain profits of manufacturers at all levels is analyzed under the two situations of competition and coordination. The results show that: (1) the government competition policy is conducive to the increase of manufacturers’ profits; (2) the increase of technological innovation efforts can quickly increase the profits of manufacturers; (3) compared with the competition situation, the profits of manufacturers and the total profits of the whole supply chain are higher under the coordination situation. This conclusion is of practical significance to analyze how to make photovoltaic policy and how to deal with the relationship between the upstream and downstream of polysilicon supply chain under the double constraints of upstream polysilicon manufacturers and the actual situation of China’s market, so as to optimize the profits of the whole supply chain manufacturers.

Key words: competition policy; technological innovation level; competition and coordination; supply chain