Research on incentive problems of government in promoting manufacturers to develop reverse logistics

It is essential that government promotes manufacturers to develop reverse logistics for society. In this paper, a principal-agent model including other observable variables is presented, to analyze how government makes the optimization contract. Comparing with the basic principal-agent model, the principal-agent model including other observable variables may enhance the intensity of the contract, as well as lower the cost of agency, thus enthusiasm of manufacturers is aroused in developing reverse logistics.