Abstract: Considering the government's three decision-making goals, the premium and penalty mechanism of government design problem of the reverse supply chain is discussed in this paper. With and without the premium and penalty mechanism is established under the game model of the reverse supply chain, the equilibrium solution of the government premium and penalty mechanism is gained, and the results are compared to discuss management insights. Finally, the conclusions of the model are verified by examples, and further simulation analysis of the influence of exogenous variables on the decision variables is also listed. The study has shown that: the government premium and penalty mechanism can not only improve the recovery rate of waste electrical and electronic products, but also reduce the retail price of new products, improve the repurchase price, which is conducive to the improvement of the welfare of the whole society; premium and penalty efforts are increased with the increase of market capacity, the government should consider the market size of the products of the manufacturer while implementing the premium and penalty mechanism to develop premium and penalty intensity rather than to formulate a unified incentive intensity of all manufacturers.It would be better to improve the recovery rate of the reverse supply chain that the government considering the welfare of the whole society and the environmental effects brought by the collection of waste electrical and electronic products.

Key words: government's decision-making goal, premium and penalty mechanism, reverse supply chain, collection rate