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

Cai Cai,Tan Tan,Guo Guo

doi:10.3390/ijerph16224544

Cai Cai, Tan Tan + Show 1 more

Open Access

https://doi.org/10.3390/ijerph16224544

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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for the government and manufacturers, given that the existing new energy automobile subsidy policy is about to be withdrawn completely.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.

Highlights

In order to promote the technological progress and market development of new energy vehicles, the Ministry of Industry and Information Technology of China formulated and implemented the Regulations for the Admission of New Energy Vehicle Manufacturers and Products in 2009
In the government’s optimal incentive contract with complete information, the optimal transfer payment and the optimal effort level are positively correlated with the manufacturer’s initial technology level; the manufacturer cannot make a profit in the incentive project; when the same amount as the transfer payment is made, the government can get more expected net utility by motivating a high-tech manufacturer than a low-tech manufacturer
The paper draws the following conclusions: In an optimal incentive contract of a government with complete information, the optimal transfer payment and the optimal effort levels are positively correlated with the initial technical level of the manufacturer; the manufacturer cannot make a profit in the incentive project; the government can obtain more expected net utility by motivating high-level manufacturers than low-level manufacturers with an equal amount of transfer payment

Summary

Introduction

In order to promote the technological progress and market development of new energy vehicles, the Ministry of Industry and Information Technology of China formulated and implemented the Regulations for the Admission of New Energy Vehicle Manufacturers and Products in 2009. On the premise that the technology level of new energy vehicles can be improved, this paper uses the principal–agent theory to study the design of government incentive contracts under the condition of asymmetric information of the initial technology level of manufacturers. In this mechanism, the government is the principal and the manufacturer is the agent. This paper focuses on the initial technical level of manufacturers for symmetric information, and examines the question of how government-designed, quantitative contracts effectively encourage manufacturers to make technological innovations, as well as providing reference for government policy formulation

Model Assumption

The Government’s Optimal Incentive Contract under Complete Information

Optimal Incentive Contract of the Government with Asymmetric Information

Information Value

Conclusions