This paper examines the impact of an investmemt subsidy on strategic investment and social welfare within an asymmetric duopoly where the two heterogeneous firms possess varying capacities, operational and investment costs. Within this market, firms make optimal choices regarding whether to be the leader or follower in entering the market, as well as the optimal production quantity. Our findings indicate that it is never optimal for the government to subsidize the firm with a new technology that requires higher investment costs, despite having a lower marginal operational cost, to make it the leader in entering the market. Instead, it is more advisable to allow the older technology to make the initial investment and the new technology to be a follower.

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