Abstract: Utilizing the Cournot's quantity competition model, how the industrial structure and R&D spillover affect the cooperation between upstream and downstream companies for their innovation strategies were comparatively analysed. The results indicated that the upstream market monopolistic structure is beneficial to the downstream companies to innovate their R&D activities, while the competitive upstream one is beneficial to the upstream companies to do such activities. When the industrial structure is monopolistic, in the upstream companies the profits and social welfare for employees decrease with their increasing R&D spillover and, when the industrial structure is competitive in the upstream ones they increase first then decrease but the downstream ones remain their profits unchanged.