Which policy can effectively promote the formal recycling of power batteries in China?

Abstract

China's power battery recycling (PBR) market is embryonic, facing a 'Gresham's Law’. A critical concern for the government is ascertaining policies that can effectively enhance formal PBR and boost the competitiveness of authorized channels. Our study develops an evolutionary game model incorporating the government, recyclers, and consumers, investigating the impact of subsidies for formal recyclers, consumer subsidies, and deposit refund policies on the formal recycling process. The main conclusions are as follows. (1) The evolutionary strategy for the PBR game system is (non-regulation, formal recycling, green behavior) when recyclers acquire substantial reputation gains from formal recycling, and a non-regulation approach outstrips the government's benefits from regulation. (2) Subsidies for recyclers are more effective in fostering formal recycling of power batteries than consumer subsidies. When the government subsidy to formal recyclers increases from 0 yuan/kWh to 40 yuan/kWh, The evolutionary stable state transitions from (regulation, informal recycling, non-green behavior) to (non-regulation, formal recycling, green behavior). The incentive impact of consumer subsidies is relatively negligible. (3) The deposit refund policy significantly advances formal PBR, with both the increase in deposit amounts and refund ratios capable of reversing the low rates of formal recycling.