Abstract This study introduces the quality of the product heterogeneity game model, vertical market analysis system of producer responsibility (EPR), when facing the end product of waste supply chain downstream enterprises entrust a third party independent processing and processing when the choice, the government how to develop the optimal recycling schemes and the downstream enterprises endogenous choice problem of processing mode. It is found that the optimal proportion of government recovery is negatively correlated with the product quality heterogeneity between enterprises and the marginal pollution damage. On the issue of endogenous selection of enterprise treatment mode, enterprises with high product quality choose to handle independently while those with low product quality choose to entrust third-party enterprises to handle. When the marginal damage of pollutants is relatively low, the social welfare level is the highest under the endogenous choice of enterprise treatment mode; when the marginal damage of pollutants is relatively high, both enterprises choose to independently handle it, which will bring higher social welfare level.
