Game of Homes: Carrots, Sticks, and the Puzzle of Housing Vacancies

Abstract

Housing affordability and high vacancy rates are pressing issues faced by countries worldwide, with notable challenges arising in many parts of Asia. This study, taking Taipei as a representative model, investigates the strategic interactions among governments, homeowners, and rental service providers in the utilization of vacant houses. By employing a tripartite evolutionary game model, we found that a balanced strategy integrating both incentives (“carrots”) and penalties (“sticks”) outperforms single-pronged approaches. It’s vital to calibrate these incentives with homeowners’ perceived efforts and risks. Our findings advocate for a dual policy approach: offering incentives to homeowners and raising holding costs for vacant properties. Furthermore, we emphasize the crucial role of rental service providers, indicating that enhanced regulations could bolster trust and invigorate the rental market. While the study focuses on Taipei, the findings offer broader implications for housing economics debates.