Analysis of China Real Estate Price Regulation Based on Game Theory

Abstract

By employing the game theory, we build three tripartite parties models, and take central government, local governments, real estate developers, banks, buyers and other elements into account to analyze the high real estate prices of China. We find that for the rational economic man pursues the maximization of his own interests, they secretly unite or construct more high-grade houses. And because of various reasons, China’s real estate market has three major features, that is high land prices, high house prices, and high vacancy rates. The excessively high price-income ratio impairs the long-term interests of the central government and ultimately leads to the loss of low-income people’s interests. We also put forward some suggestions in this paper.