Reward–Penalty vs. Deposit–Refund: Government Incentive Mechanisms for EV Battery Recycling

Hao Hao, Wenxian Xu, Fangfang Wei, Chuanliang Wu and Zhaoran Xu
Additional contact information
Hao Hao: College of Economics and Management, Shanghai Polytechnic University, Shanghai 201209, China
Wenxian Xu: College of Economics and Management, Shanghai Polytechnic University, Shanghai 201209, China
Fangfang Wei: College of Economics and Management, Shanghai Polytechnic University, Shanghai 201209, China
Chuanliang Wu: College of Economics and Management, Huainan Normal University, Huainan 232038, China
Zhaoran Xu: College of Economics and Management, Shanghai Polytechnic University, Shanghai 201209, China

Energies, 2022, vol. 15, issue 19, 1-18

Abstract: With the rapid development of electric vehicles (EVs), many EV batteries have entered the retirement stage, leading to increasing concerns about the impact of resource recycling and environmental sustainability. Some countries have successfully applied reward–penalty and deposit–refund mechanisms in similar fields, such as lead-acid and waste portable batteries. However, whether these mechanisms are conducive to collecting waste EV batteries is unclear. This study aims to comprehensively analyze the influence of reward–penalty and deposit–refund mechanisms in EV battery collection by developing a Stackelberg game theoretical model. In the model, the recycling enterprise is the leader and the EV manufacturer is the follower. Furthermore, the total social welfare is used as the indicator to select the optimal incentive mechanisms. The results show that (1) both mechanisms could improve collection rates and recycling enterprises’ profits, though the collection rate is lower under the reward–penalty mechanism than the deposit–refund mechanism unless the reward/penalty coefficient takes a very high value. (2) Regardless of government focus on increasing the sales volume of new EV batteries, collection rates, or social welfare, the boundary conditions of the choice of the two mechanisms are obtained. Additionally, the boundary conditions are related to the trade-in discount and refund coefficient. (3) Under the deposit–refund mechanism, even if the refund coefficient is less than 1, the mechanism may still lead to a higher collection rate than the reward–penalty mechanism.

Keywords: EV battery recycling; reward–penalty mechanism; deposit–refund mechanism; trade-in strategy; game theory (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/1996-1073/15/19/6885/pdf (application/pdf)
https://www.mdpi.com/1996-1073/15/19/6885/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:15:y:2022:i:19:p:6885-:d:920092

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().