Dynamic optimization of battery recycling e-platforms under non-equalizing supply and demand: Recycling price and service commissions

Abstract

With the rapid advancement of electric vehicles (EVs), the burgeoning increase in used power batteries necessitates the development of efficient battery recycling e-platforms. A key challenge in this field is the mismatch between supply and demand. In response, a dynamic optimization model is proposed to capture the non-equalizing supply-demand relationship and its linkage over continuous periods to enable dynamic simulations and predictions of transaction volume changes. Meanwhile, pricing and commission-setting strategies are optimized based on the objectives of maximizing social welfare and platform revenue. The result shows that due to the lower recycling volumes that result, increasing the recycling price usually increases platform revenues, exacerbates environmental costs, and leads to lower social welfare. Moreover, platform revenues are more sensitive to commission rates than social welfare, which is more vulnerable to recycling prices. Furthermore, prioritizing social welfare leads to a higher recycling volume compared to prioritizing revenue, but it also creates an imbalance between supply and demand, destabilizing the recycling market. With the dynamic pricing and commission strategies, this study enriches the literature in the third-party recycling mode for power batteries, offering a novel perspective that is more aligned with real-world operational conditions. Our findings help platforms clarify the impact of pricing and commission decisions on platform revenue and social welfare and thereby provide support for their decision optimization.

Keywords: Commission rate; Dynamic optimization; Non-equalizing supply and demand; Pricing; Recycling e-platform; Waste power battery.