For the dual information asymmetric problem in virtual enterprise(VE) with both moral hazard and adverse
selection, by incorporating Stackelberg game model and the theory of incentive mechanism, the two stage principal-agent
monitoring models based on the partner’s private information and effort are derived to incentive the partner and screen the
true information respectively. Furthermore, the corresponding optimal monitoring strategies are analyzed and compared with
the no monitoring scenario. The results verify the effectiveness of hiring the monitoring organizations to monitor the partner,
and the action monitoring strategy is more effective. The numerical example is given to show that the conclusion is valuable
to the operation of VE.