Abstract: For stimulating consumption demand, product subsidy policy was implemented by the government.Under this background, considering game and competition of two enterprises, we studied the influence on demand, product price and enterprises' profit by competition and subsidy. The result showed that the government increased subsidy, market demand of product would be increased; but the enterprise might raise product price, part of government's subsidy was indirectly transferred to enterprise; meanwhile, enterprises' profit might be also improved.It was especially emphasized that if enterprises' mutual competition was more vigorous, the increased scope of product price, market demand, enterprises' profit might be increased more rapidly with government's subsidy increasing.