Incentive Compensation Mechanism for the Infrastructure Construction of Electric Vehicle Battery Swapping Station under Asymmetric Information

Abstract

Driven by the application and promotion of the electric vehicle battery swapping station (BSS), this paper addresses a key challenge in the BSS’s infrastructure construction, which is information asymmetry between the government and BSS. First, inspired by the insights of financial contracting, this study constructs the government’s capital allocation and compensation models for the BSS via the principal–agent approach. This paper is the first developing an incentive-compatible (IC) compensation mechanism for improving the operation of BSS in the presence of two kinds of asymmetric information (operation level and effort level). Next, this paper derives the government and BSS’s equilibrium strategies under two scenarios of symmetry and asymmetry information, respectively. Finally, this paper compares the equilibrium solutions obtained in the above two scenarios to verify the effectiveness of the allocation scheme and compensation mechanism. This paper finds that the capital allocation scheme and compensation mechanism proposed in this paper can incentivize the BSS to report its actual operation level and take the corresponding effort level. Moreover, the government and BSS’s underinvestment problems become smaller when the BSS’s operation level is relatively high. Several important managerial insights are derived based on our analytical and numerical results.

Challenges and opportunities of FACTS devices interacting with electric vehicles in distribution networks: A technological review

“…charging system that relies on Elliptic Curve Qu-Vanstone (ECQV) that meets the necessary criteria and reauthentication method [266]. This study derives the government's capital allocation scheme and compensation mechanism for the battery swapping station (BSS) [267]. Utilizing data obtained by section switches, the effect of communication duration can be evaluated in SVR tap switching control.…”

Risks Caused by Information Asymmetry in Construction Projects: A Systematic Literature Review

“…The earliest research on information asymmetry in construction projects can be located in the Level II group (see [43,45,46,84]). The concept of information asymmetry was applied in research on the following: risk-sharing ratios between the client and contractor [85,86], affordability of new technologies and [10,45,46,87,88]; general contractor behavior in cases of subcontracting [84,89]; causes of cost overruns and low profitability [90][91][92][93]; inter-organizational trust asymmetry behavior in construction projects [94]; opportunistic behavior of agents in construction projects [95][96][97][98]; bid calculations for construction projects [99]; different types of contracts and incentive mechanisms [43,[100][101][102][103]; implementation of BIM in construction projects [104,105], procurement process [106]; supervision strategies of clients [107]; and effectiveness of safety monitoring in the construction industry [108].…”

“…These measures include a definition of incentives for agents. For example, agents are incentivized to honestly report their expenses [68,128] and other important information [96] to finish the work as planned [10,29,30,34,45,46,56,58,60,62,67,70,71,73,79,81,82,88,108], to recover after unforeseen events [56] and to adapt to different project circumstances [61,63,95]. The contract should also include the following: objective criteria for its enforceability [48,49,90], clear intentions of both parties [10,79,82,108], fair risk-sharing [32,86,91,96,101], mechanisms for cost adjustment according to the market situation [59], quality standards, technical specifications and performance specifications [43] and protective measures (guarantees), such as, for example, minimum rates of return, minimum income and maximum cost limits [102].…”