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Design of Incentive Contract for Technological Innovation of New Energy Vehicles with Asymmetric Information

Author

Listed:
  • Dong Cai

    (Business School, Sichuan University, Chengdu 610065, China)

  • Chunxiang Guo

    (Business School, Sichuan University, Chengdu 610065, China)

  • Yue Tan

    (Business School, Sichuan University, Chengdu 610065, China)

Abstract

The improvement of China’s new energy automobile technology is one of the most pressing issues for the government and manufacturers, given that the existing new energy automobile subsidy policy is about to be withdrawn completely. Considering that the manufacturer has the private information of the initial technology level of new energy vehicles, its technology can be improved by means of technological innovation. Using principal–agent and regulation theory, this paper studies how the government designs incentive contracts to motivate manufacturers to strive to upgrade new energy automotive technology. The study has obtained a quantitative incentive contract under full information and a quantitative screening contract with asymmetric information, which provides an effective reference for the design of government subsidy contracts. It was found that the existence of asymmetric information reduces the expected net utility of the government in incentive projects, and the technology upgrading of low-level manufacturers is insufficient, but will not affect the technology upgrading of high-level manufacturers who will get information rent. The conclusion has good reference value and guiding significance for government policy-making with asymmetric information.

Suggested Citation

  • Dong Cai & Chunxiang Guo & Yue Tan, 2019. "Design of Incentive Contract for Technological Innovation of New Energy Vehicles with Asymmetric Information," IJERPH, MDPI, vol. 16(22), pages 1-14, November.
    • Handle: RePEc:gam:jijerp:v:16:y:2019:i:22:p:4544-:d:287869
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    References listed on IDEAS

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    Cited by:

    1. Ma, Miaomiao & Meng, Weidong & Li, Yuyu & Huang, Bo, 2023. "Impact of dual credit policy on new energy vehicles technology innovation with information asymmetry," Applied Energy, Elsevier, vol. 332(C).
    2. Congli Su & Mingxi Wang, 2022. "Quality incentive contract design in government procurement for innovation," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3665-3684, December.

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