Governance mechanisms for Low-value recyclable waste recycling under dual information asymmetry and residents’ perceived value

Abstract

The recycling of Low-value recyclable waste (LVRW) suffers from low economic value, high collection costs, and weak resident participation, resulting in sustained reliance on government subsidies. However, asymmetric information on recyclers’ ability and effort leads to subsidy misallocation and reduced incentive efficiency. This study develops a principal–agent based dynamic model with residents’ perceived value and compares three regimes: no subsidy, recycler-only subsidy, and dual subsidies for recyclers and residents. Results show that no subsidy yields a low-efficiency equilibrium. Recycler-only subsidy raises effort and output but concentrates benefits among high-ability recyclers. Dual subsidies achieve more stable and balanced growth in recycling performance and social welfare. As a vital transmission channel, perceived value leads to varied subsidy incentives under behavioral feedback. The findings inform more efficient subsidy design for LVRW recycling systems.