Government incentive mechanism design for electric vehicles battery remanufacturer and recycler under information asymmetry

Facing asymmetric information on recycling rates and amounts between the manufacturer and recycler, the government suffers from economic losses and the reduced incentive effect. For the government, designing incentive contracts plays an essential role in improving the recycling efficiency in the EVs (electric vehicles) battery recycling supply chain. To settle the asymmetry information on recycling rate and amount between government and manufacturer, government and recycler respectively, this paper formulates two Stackelberg game models and uses them to design information screening mechanisms to identify the true recycling rate of remanufacturer and recycling mount of recyclers respectively. The essence of the information screening mechanism is to design differentiated benefits distributed mechanism according to the recycling rate and recycling amount of the manufacturer and recyclers respectively and inspire them to make their best effort to recycle. After solving the optimal value of decision variables, the effectiveness of the mechanism is examined and discussed. Results show that the two information screening mechanisms effectively identify the enterprise types, and improve the recycling effort of both manufacturer and recycler. Compared with a full information situation, the information screening mechanisms can make the supply chain make the near ideal state under information asymmetry. These conclusions can provide scientific references for the government to formulate policies.