Abstract:

As more businesses enter the electric car market, they must consider how to recycle used power batteries. This analysis takes into account the two rival automakers, the established player and the recent entry. The current incumbent's forward (reverse) channel structure is reliable. The incumbent's forward channel structure differs from that of the new entrant's, therefore the latter must choose between a standard 3P-recycler and an emergent co-recycler as its reverse channel structure. The authors discover that the new entrant's choice of reverse channel structure will be influenced by both the fixed cost of used power battery treatment and the government's one-time fixed cost subsidy. Interestingly, the findings show that while societal welfare declines with a large fixed cost of squandered power battery treatment, a firm's profit is not necessarily worse off. Furthermore, the authors discover that the government's one-time fixed cost subsidy has no direct impact on consumer surplus or social welfare, but it can have an impact through the new entrant's choice of the reverse channel. In order to encourage new entrants to choose a co-recycler as the reverse channel in the presence of a high fixed cost, the government would like to take into consideration a one-time fixed cost subsidy programme. But when there is a low fixed cost, the government does not have to pay the fixed cost for the new entrant. The analysis sheds light on the factors that influence a new entrant's decision on which methods to employ in a hostile environment.