Optimal designing of incentive mechanism for producers taking back and recycling waste products

Based on the principle-agent theory, the problem of incentive mechanism was researched for the governmental department of environmental management managing multi-manufacturer and every manufacture with tasks of taking back and recycling end-of-life products. The Optimal contracts for government to encourage manufactures taking-back and recycling their end-of-life products were designed, and the optimal model was built, and then the parameters of the model were analyzed, and the government subsidies were schemed, which taken manufacturers performing environmental responsibility trigger social image improving result in potential revenue augment and immediate income increase coming from recycling these end-of-life products. Our research targets are that stimulate enterprise to better perform at the end of the responsibility of pollution control.